Behind the City's walls Part 1: history

In the first of a new series, Finbarr Bermingham tracks the Square Mile's long development into the most economically powerful zone in the world

It's hard to believe when you gaze across its skyline - from the meteoric Heron Tower, to the iconic Gherkin, to the gradually crystallising Shard - that 2,000 years ago, the site on which modern day London stands was a series of tiny settlements dotted along the fertile Thames Valley. Colchester was the largest town in Britain, and it wasn't until invading Romans were drawn to the plenitude of water and proximity to the coast in 47 AD that "Londinium" was established. In its infancy, the town was sacked by a local tribe, the Iceni (led by Queen Boudica), before being rebuilt in traditional Roman style, becoming the largest town in Roman Britain by 100 AD.

Wasn't built in a day...

The Romans laid the grounds for the City as we know it today (the borders of their settlement were remarkably similar to those of today's City), bringing with them their - revolutionary at the time - roads, drainage, irrigation and sanitation systems. They, in turn, were impressed by the locals' love of "personal show and adornment" and incorporated it into their own fashions. At some point over the ensuing two millennia, the qualities of the two populations seem to have reversed!

London grew in size and significance under Roman rule, succeeding Colchester as the capital of "Britannia", with its population reaching a peak of around 60,000 (today's population is just 11,700). As the settlement grew, the Romans infused early London with their distinctive architecture and culture, the remnants of which we can still see today. For instance, today's thoroughfare London Wall marks the location of the Roman settlement's boundary. And in the Guildhall lies the remains of an amphitheatre, in which gladiators, selected from the slave population, would battle it out with lions, bulls and bears in front of crowds of up to 6,000 - a surely fitting history for an area that was, centuries later, to house the UK's financial markets.

Alas, as empires rise, so too do they fall. Crippled by plague and fires and besieged by invading Vikings, Scots and Saxons, the Romans withdrew from Britain in 410. The City of London lay unpopulated until Anglo-Saxon monarch Alfred the Great, the self-styled first king of the English, resettled and restored the old Roman walled area in 886, with the Saxons having established the nearby town of Lundenwic (today's Aldwych) years previously.

A city of two tales

The Saxons maintained control over what is the City of London today, which they'd christened "Lundenburh", for almost 200 years, repelling Viking raids throughout. In the tenth century, they established six mints in the City - more than any other part of England - which was an early harbinger of the financial focus the district would later acquire.

The history of the City through the Middle Ages is a rich tapestry of progress laced with tragedy. As Greater London continued to sprout up around it, absorbing the villages and hamlets that would become modern day London boroughs, the City was formally granted ounty status in the twelfth century, becoming, under a administrative structure that remains to this day (more on this topic in our next issue), a self-governed, self-policed civic district.

As trade (both domestic and international) and commerce grew, so too did the City's population, placing strain on the narrow, cavernous streets, wooden structures and Roman-era sanitation systems. As such, the area was prone to disease and conflagration. Half of its population perished in the Black Death in the mid-fourteenth century, while the 1666 Great Fire of London gutted almost everything inside the London Wall. The Great Fire arrested the City's development; rebuilding efforts lasted over half a century. But afterwards, its fledgling financial industry took off in earnest.

Financial times

The economic roots of today's City of London, Europe's biggest financial hub and the home of some to the world's largest and most valuable institutions, can be traced back to the foundation of the Royal Exchange (an early forerunner of the London Stock Exchange) in 1565, which acted as a centre of commerce for its early companies. But it wasn't until the late seventeenth century that the City had the political stability to flourish. The revolution which placed William and Mary on the throne in 1688 ushered in a period of sound fiscal governance (the Stuarts they deposed were accused of "lax financial management"). In 1694, the Bank of England was established with a mandate to galvanise the country's resources and capitalise the government. Before the end of the seventeenth century, Barclays and Hoares banks (both of which still exist today) were founded within the London Wall, as well as insurance market Lloyd's of London. The banks were originally goldsmiths, who started out providing gold to the Royal Mint and then gradually extended their services to the aristocracy and gentry of London, and, over time, substituted dealings in actual gold with those in receipts denoting its value - a banknote.

The Industrial Revolution, which straddled the eighteenth and nineteenth centuries, saw a rapid rise in Britain's international trade, with the City at its epicentre. More UK banks were established, which extended their offerings to include all the services we associate with commercial banking today. With the advent of globalisation in the twentieth century, international merchant and investment banks became a familiar sight on the City skyline too. Perhaps the most significant event in the morphing of the City into its current incarnation was the sudden deregulation of financial markets by prime minister Margaret Thatcher in 1986 (known as the "Big Bang"), which helped British banks compete on the global stage, but which almost certainly facilitated the events which led to the financial turmoil the nation faces today.

While the City's commercial significance has ballooned, its population has fallen drastically over the past 200 years. Residents have moved to the suburbs and most of the houses in the Square Mile have been razed to create office space. Several attempts have been made to integrate the City administratively into Greater London, all unsuccessful.

Today, the City of London is the second smallest city in population terms in the UK, but probably the most powerful. Every part of our lives is affected by what happens within its boundaries, and in our next issue, we'll be looking at the people and organisations that allow it to function.