The location of Stonetown is never specified within the series, other than the fact that it is in the USA. However, a reader may deduce that it lies somwhere in the northeastern United States: It is in some coastal state on the Atlantic, since Portugal is "across the ocean", as said in Book Two, and has its own harbor named after it.
Only a brief synopsis of the history of Stonetown is known, and only the events that occured during the Society's time.
From before Reynie's birth to the end of book one, Stonetown and most of the United States (possibly even the world) were in a colossal depression called The Emergency. This was a period in which everything - the environment, finance, the government, the stock market, education, health - was a total fight. The source of this crisis was Ledroptha Curtain and his Whisperer, broadcasting hidden messages from his island school directly into people's minds, and telling them that the world was ridden with bad government that was ruining it.Therefore, the people went crazy and screwed up everything, like idiots.
After the Emergency, Stonetown entered a recovery period in which an almost equally damaging economic recession occurred. Kate Wetherall (who frequently reads the newspaper) comments that the Emergency, at least, was dramatic to read about; but this recession was just a dull, depressing mess. As of the end of the series, this recession has still not been resolved.
The Monk Building is located on Third Street, apparently in Stonetown's busiest district. This is the placing of the very first scene in the series. Mr. Benedict held one of his tests here and also owns several offices (though by book three he's down to just one, used to store disguises and accessible through a secret passage hidden in his own cellar). It was also once searched by Ten Men, who had been told to rendezvous in a building coded as "Abbott Edifice."