In 2009 Teddy Jamieson spoke to former New Order bassist Peter Hook about his involvement with the Hacienda

The best nights in the Hacienda, Peter Hook remembers, were those when it had its own internal meterological conditions. "When it got really packed, it used to rain from the roof because of the condensation. It actually felt quite steamy." Today, in a London hotel, he is smiling at the recollection. "It was very enveloping. You really did feel safe. In the golden period between '88 and '90, everything went right. It really did feel you were part of something absolutely wonderful. And you were forever trying to get people to join you. It was right in its infancy. There was nothing bad about it at that point."

The Hacienda has been closed for 12 years now. It has become myth: a fabulous, exotic, ridiculous creation that exists as a glittering, gilded memory. It lost everyone involved in it a fortune, was badly run, and in later years was a victim of the gangs-and-gun culture that poisoned the atmosphere of Manchester. And yet it helped transform the city's image, and in doing so helped shape the night-time economy of the whole country by changing what we listened to, how we listened to it and, for some (including Hook) what drugs were taken while listening to it. It introduced acid house (and ecstasy) to Britain, proved a gateway to the whole idea of club culture and became a handy home for the baggy-trousered, chemically enhanced movement known as Madchester.

Hooky, as he is known by all and sundry, is 53 years old, a former addict and alcoholic (he doesn't use the word "former"), a one-time member of not one but two of the most important British bands of the last 30 years (no, not Monaco and Revenge), current member of indie supergroup Freebass and latterly an author. He has written a memoir of the club which cost him and his fellow members of New Order millions. "We once worked out, " he writes in the foreword to The Hacienda: How Not to Run a Club, "that, from the time it opened in 1982 to when it closed in 1997, each punter through the door cost us GBP10." How much did that add up to, I ask him? "Somewhere between four and six million that we knew about."

He still reckons it was worth it. "It is a strange thing to think that a group like New Order subsidised a meeting place for the biggest f-ing lunatics in Manchester. That's the oddest thing. No other group will ever do that."

Of course, it's probable that no other group would ever want to. The story of the Hacienda can be summed up pretty simply. No-one came. Then everyone came. Then the wrong people came. Hook saw it all. The book is full of tales of him watching German industrial noise terrorists Einstuerzende Neubauten take a pneumatic drill to the stage, drunkenly gawping at money going up in flames when someone set off some indoor fireworks, urinating in a bucket in the kitchen, being investigated by the taxman, and acting as a bouncer on the door when the gangsters tried to get in.

Recently Hook's been working on a soundtrack for CCTV footage from the club. The violence has been edited out. "They had to cut out the trouble. If only you could have done that in real life, " he says, almost wistfully. "Delete. Like magic. Look at that, everybody just enjoying themselves for two hours."

If anyone can be said to be behind the Hacienda it was Rob Gretton, the manager of both Joy Division and New Order. Even more than Tony Wilson, head of Factory Records and the main public face of the club, it was Gretton who believed Manchester needed a club that would be the equivalent of the New York venues where his charges were first introduced to electro. From reading Hook's account, it would appear that it was Gretton's force of will that pushed the idea through. "Well, he was older than us, " Hook says, "and he was a lot stronger than us. He was a presence. Joy Division weren't much of a presence. Timid was the word."

That's difficult to imagine today as Hook sits in his shorts and tattoos (is that the Human Torch on his calf?), effing and blinding and telling me how much he is enjoying being a DJ. He's just back from the Colombian capital Bogota. If he'd gone there six years ago, he notes wryly, he'd never have come back. It would have killed him. These days, as his PR points out, it's all "yoga and yoghurts".

His memory of nights at the club are pretty clear given, he admits, he spent many of them off his trolley, screaming along to Candi Staton. I ask him what he remembers of the night the club opened. May 21, 1982. "The vastness of it was truly breathtaking. I had never seen anything like that before in Manchester." No wonder. The architect Ben Kelly had been commissioned to turn a disused warehouse into a state-of the-art club. He spent somewhere in the region of GBP344,000, some of which came from the profits of New Order's first album. The band, meanwhile, were living on GBP20 a week.

The place was mobbed that opening night and then empty for the next five years. The band had to sign personal guarantees for the club that was leaching money every night of the week. A more sensible approach would have been not to keep it open every night of the week. But the Hacienda and Factory Records weren't really about sensible. "Tony and Rob were always quite uncompromising, and just because the world didn't catch on with their idea didn't mean those two men were going to give their ideas up."

The club was saved by acid house. For a while, at least. On his first trip to Ibiza, Hook recalls "running around the island completely off my f-ing rocker - don't do it kids, it's very dangerous", but not quite recognising what was happening. The potential of the new sound was clocked by the Happy Mondays - and its accompanying new drug, ecstasy, by the people who were hanging around with the Mondays.

And so, in the late 1980s, the Hacienda became party central for the acid-house generation. Rammed every night, rain falling from the ceiling. Paradise was short-lived though. In July 1989, 16-year-old Claire Leighton became the first known ecstasy victim in the UK after taking a tablet in the club. "It was awful. It really was at that point that you felt foolish, seeming to think that you could propagate something that was frankly ridiculous. It was a very sobering moment for us all really. But we were young. Your only defence is you were young."

But the drugs attracted gangs, and the gangs meant violence both in and outside the club. The club took the decision to close. But it changed nothing. As soon as it opened again the violence started up again. "There were many more incidents, " Hook writes, "culminating in the head doorman being chased out of the club by an Asian kid holding an Uzi."

The problem was that it would have cost the band and Factory more to close the place than to keep it open. And by now the club's problems were poisoning the atmosphere in New Order.

"I think we all suffered. Being asked to write to order after being in the world's most easy-going record company. 'You've got to do this because otherwise it will go down and if it goes down we're all f-ed.' As people we really didn't respond to that. Bernard [Sumner], in particular, didn't respond to it. It became work more than pleasure. That was [because of] the Hacienda, without a doubt."

In 1997 the Hacienda closed its doors. In the years since, both Gretton and Wilson have died, while New Order have split, reformed and split again. And Hook - as author and as DJ - has become the official face of the club. The building has been turned into flats. The Hacienda Apartments. For Hook it's a "beautiful gravestone. To me it was so much nicer than seeing Virgin running a club there or some scabby bar. It would be like seeing another bloke out with your girlfriend."

Peter Hook still dreams about the Hacienda, though. He dreamt about it last night, he tells me. A drug dream. "You feel guilty when you wake up, like you've done something wrong." It's the only thing he feels guilty about. "I hope that maybe Bernard and Stephen [Morris] do relish the impact we helped make in Manchester because it was us who helped Rob and Tony. So, the glory is all ours."

The Hacienda: How Not to Run a Club by Peter Hook is published by Simon & Schuster, priced £18.99.