The City of London: Money, Monarchy and the Square Mile

How a Roman port became a merchant republic inside a kingdom, and why so much of its medieval machinery - wards, Aldermen, livery companies, a Remembrancer watching Parliament - is still running.

17 min read

Once a year, the City of London puts its constitution on parade. A gilded state coach rolls through streets normally occupied by bankers and delivery vans. Livery companies (London's trade associations and guilds) appear in gowns and regalia, soldiers carry pikes, the City's ancient officers process with sword and mace, and enormous wicker figures of Gog and Magog — mythical guardians of London — join a spectacle whose origins lie more than eight centuries in the past. The Lord Mayor's Show

That mixture of pageantry, commerce and constitutional ambiguity is a good introduction to the City itself. The Square Mile is not an independent state hiding inside Britain, as some more excitable accounts claim. The monarch does not need permission to enter it; Parliament can legislate for it; businesses there pay British taxes and obey British law. Yet it is also emphatically not an ordinary London borough. It has a Lord Mayor separate from the Mayor of London, its own police force, 25 medieval wards, elected Aldermen, Sheriffs, livery companies that still participate in civic elections, an official called the Remembrancer whose office has represented City interests to Parliament since the sixteenth century, and a local electoral system in which businesses can nominate voters. The Corporation even administers ancient investment funds, five Thames bridges and thousands of acres of green space far beyond its boundaries. The explanation is not that the City escaped history. It is that so much of its history was never completely abolished.

The story begins with trade rather than finance. Roman Londinium was established around AD 50 at a place where the Thames could be bridged and ships could penetrate deep into southern Britain. Wine, olive oil, pottery and luxury goods arrived at wharves along the northern bank; metals and other products left in the opposite direction. By the end of the second century the Romans had enclosed the settlement behind a wall roughly two miles long and six metres high. That wall continued to shape London for more than a thousand years and helps explain why the present City has such a peculiar outline. The Square Mile is actually about 1.12 square miles, but its territory still broadly reflects the ancient commercial settlement from which the rest of London grew. Beneath Bloomberg's headquarters lies the Temple of Mithras

The crucial development came after Rome. By the eleventh century London had recovered into a major European trading centre whose merchants possessed traditions of local government already old enough to be defended as customary rights. William the Conqueror understood both the opportunity and the danger. London initially resisted him after Hastings, and William responded with the combination that would characterise the City's relationship with monarchy for centuries: reassurance in one hand, force in the other. In 1067 he issued a tiny charter promising that Londoners could retain the laws and customs they had enjoyed under Edward the Confessor. At the same time he established the great fortress at the City's eastern edge that became the Tower of London

The City gradually converted economic importance into political autonomy. Londoners gained the right to elect their own Sheriffs in 1199 — significant because the Sheriff had traditionally represented royal authority — and the annual election of a Mayor was formally confirmed in 1215. When King John was forced to agree Magna Carta weeks later, London was the only city named individually: its existing liberties were explicitly protected. The Mayor of London was not a democratic mayor in anything like the modern sense, but the principle was unusual. In a feudal world where power generally descended from king to nobleman, London's merchant elite increasingly governed itself. Guildhall became the architectural expression of that confidence: the present Great Hall was begun in the fifteenth century as a civic palace large enough for London's rulers to hold courts, banquets and ceremonies on a scale comparable with royal government.

The reason successive monarchs tolerated this independence was straightforward. The City had money. Medieval London's wealth came from its position as England's dominant port and commercial marketplace. Wool and cloth were particularly important, but merchants dealt in wine, grain, fish, metal, spices and an expanding range of imported luxuries. Trades organised themselves into guilds that regulated entry into a profession, controlled standards and competition, trained apprentices and supported members who fell on hard times. These evolved into the livery companies, so-called after they adopted distinctive uniforms and regalia (liveries). To trade freely in the City, a craftsman generally needed the Freedom of the City and membership of the appropriate company. Streets still preserve the economic geography this produced — Milk Street, Bread Street, Poultry, Ironmonger Lane, Fish Street Hill — as if fragments of a medieval business directory were embedded in the modern map.

Few lives demonstrate how easily commerce, civic government and monarchy overlapped better than Richard Whittington. The historical Dick Whittington was not the penniless orphan of pantomime fame but a wealthy mercer dealing in expensive cloth. He lent substantial sums to the Crown, served repeatedly as Mayor and became an important royal financier. This was the basic relationship between monarch and City distilled into one career. Kings needed London's merchants because wars, courts and government required credit; merchants needed kings because charters, trading privileges and political stability protected commerce. The City Corporation itself notes that from the medieval period into Stuart times London was the monarchy's principal source of loans. The balance could produce loyalty, resentment or outright confrontation depending on how each side behaved.

London's horizons expanded enormously in the Tudor and Stuart periods. In 1571 Elizabeth I formally opened Thomas Gresham's Royal Exchange

This global expansion also produced some of the darkest sources of City wealth. London's financial and mercantile institutions were deeply entangled with slavery and colonial exploitation. In 1660 City merchants and the Stuart royal family established the Company of Royal Adventurers Trading into Africa, reorganised as the Royal African Company in 1672. The company became a major trafficker of enslaved Africans. London's insurers underwrote slave ships and the commodities produced by enslaved labour; Lloyd's itself now acknowledges that its market became a global centre for insuring shipping connected to the slave economy. Individual civic leaders profited directly. William Beckford, twice Lord Mayor, owned huge Jamaican estates and 1,356 enslaved people at the time of his death. Sir John Cass, another prominent City figure whose philanthropy was commemorated for centuries, was an active official of the Royal African Company.

It would be too simple to say that the City became wealthy because of slavery: its commercial importance long predated Atlantic slavery and rested on a much broader economy. But it would be equally misleading to detach the rise of London finance from the imperial system in which it operated. Sugar, tobacco, coffee and other colonial commodities passed through London's docks and markets; fortunes generated from plantations flowed into property, banking, art and politics; insurance and credit reduced the commercial risks of long-distance shipping. The Corporation has itself commissioned further research into the institutional investments and personal involvement of Lord Mayors, Sheriffs, Aldermen and Common Councillors between 1640 and 1807. The full accounting is therefore still being constructed, but the broad conclusion is no longer seriously in doubt: the slave economy was woven into the financial networks that helped make the City globally powerful.

Long before this commercial empire reached its height, the City's relationship with the Crown had produced a constitutional crisis. Charles I's attempts to raise money without Parliament, combined with conflicts over religion and royal authority, alienated significant sections of London's merchant and political establishment. In January 1642 Charles entered the House of Commons

The significance of this is easy to underestimate. Westminster possessed Parliament, but the City possessed much of the financial machinery required to make Parliament's decisions effective. Thomas Hobbes later wrote that without London, Parliament could never have made the war. The City's support was not unanimous — wealthy Royalists existed and London's politics fluctuated considerably — but Charles's failure to secure the capital deprived him of England's principal port, commercial centre, tax base and source of credit. The struggle between Crown and Parliament was therefore also a struggle over London's resources. It was an early demonstration of a principle that would define modern states: political power depends upon the ability to raise money reliably.

That lesson eventually produced perhaps the City's most consequential financial institution. Kings had long borrowed personally from wealthy Londoners, but royal credit could be unreliable. In 1672 Charles II suspended repayments owed to goldsmith-bankers in the notorious Stop of the Exchequer, damaging businesses and confidence. After the Glorious Revolution replaced James II with William III and Mary II, England needed enormous sums to finance another war with France. The solution in 1694 was the Bank of England: private investors subscribed £1.2 million, which was lent to the government, while the new Bank received a royal charter. The full subscription was raised in only eleven days. The Bank began life not primarily as the guardian of inflation but as a mechanism for turning private City wealth into dependable state finance.

This represented a subtle shift in the balance between Crown, Parliament and City. Government borrowing was no longer simply a king asking merchants for money and hoping they trusted him to repay it. Parliament controlled taxation and underpinned the state's ability to service its debts; the Bank mobilised private capital; the City supplied investors and financial expertise. The resulting system of public credit allowed Britain to borrow on a scale that became a formidable strategic advantage during the long eighteenth-century wars with France. The same financial sophistication that served merchants could now sustain navies, armies and empire. The City's power increasingly came not from resisting the state but from becoming indispensable to it.

The physical City repeatedly changed while the institutions survived. The Great Fire of 1666 destroyed the Royal Exchange, Guildhall's roof, thousands of houses and most of the parish churches within the old walls. Grand schemes proposed replacing the medieval lanes with rational boulevards and piazzas, but property ownership, cost and the urgency of reopening businesses defeated them. London was rebuilt broadly on its old street pattern. This is one reason today's City remains so strange at ground level: glass towers rise from lanes that curve around property boundaries inherited from medieval merchants. The architecture can change almost completely while the underlying commercial geography refuses to disappear.

By the nineteenth century the City was becoming a place increasingly devoted to work rather than residence. Banking, insurance, shipping and securities trading expanded while wealthier inhabitants moved westward or into the suburbs. The old markets and warehouses remained important, but the office was becoming the characteristic City building. This transformation eventually created an extraordinary demographic inversion. The medieval City may have held around 80,000 inhabitants; in the mid-nineteenth century the population exceeded 100,000. Today only about 8,600 people live in the Square Mile, while more than 670,000 people work there. Few places on earth experience such a dramatic daily change of population.

That unusual population is one reason the City's government looks so peculiar. The Square Mile remains divided into 25 wards, each represented by one Alderman and between two and ten Common Councillors. There are 100 Common Councillors and 25 Aldermen in total. Elections are formally non-party political and the members are unpaid. But unlike anywhere else in Britain, residents are not the only local electors. Because workers vastly outnumber inhabitants, qualifying companies and organisations can nominate individuals to vote in City elections. Supporters argue that a government serving a district overwhelmingly composed of workplaces needs to represent those organisations; critics see the business vote as an extraordinary survival that gives corporations a formal political role unavailable elsewhere in Britain. Either way, a medieval merchant city has solved a twenty-first-century demographic problem by retaining a franchise unlike that of any other British local authority.

The old guild system survives too, although almost none of its members now needs permission from the Fishmongers or Mercers to carry out a trade. More than a hundred livery companies remain, ranging from ancient bodies such as the Mercers (fine textiles merchants), Goldsmiths and Merchant Taylors to modern companies representing professions including information technology, tax advisers and financial traders. Their economic regulatory power largely disappeared centuries ago, but they still support training and charity — collectively giving tens of millions of pounds each year — and their liverymen continue to participate in the elections of the City's two Sheriffs and the annual choice of Lord Mayor. Before somebody can become a liveryman, they still first become a Freeman of the City of London, repeating an institution that once determined who had the right to trade.

Many of the celebrated privileges of a Freeman are mythology. You do not acquire a legally enforceable right to drive sheep across London Bridge, wander drunk through the City without arrest or carry an unsheathed sword in public. What survives is more interesting because it is real: the actual civic machinery. The Lord Mayor must first have served as a Sheriff and be an Alderman. The incoming Mayor is installed at Guildhall in the Silent Ceremony, conducted almost entirely without speech. The next day comes the Lord Mayor's Show. The City's Swordbearer and Common Cryer still hold offices dating back to the Middle Ages, while the City Marshal carries out ceremonial duties originating under Elizabeth I. Regiments granted the Freedom of the City may still parade through the streets with drums beating, colours flying and bayonets fixed.

The relationship with monarchy is similarly real but often misunderstood. The sovereign can enter the City whenever they wish; there is no constitutional border checkpoint. Yet when a new monarch makes a ceremonial visit, an old ritual may be performed involving the City's extraordinary Pearl Sword, whose scabbard is decorated with more than 2,500 pearls. The Lord Mayor offers it to the sovereign, who touches and returns it, symbolically confirming the Mayor's delegated authority within the Square Mile. Charles III performed the ceremony in 2023. The symbolism is almost a summary of City history: civic independence exists, but under the Crown; the monarch's authority is acknowledged, but through a ritual that also acknowledges the City's separate civic identity.

Parliament is treated with the same mixture of submission and vigilance. Parliamentary sovereignty applies fully in the City, but the Corporation has maintained an office specifically concerned with protecting its interests since 1571. The Remembrancer is the City's parliamentary agent and head of protocol, examining proposed legislation, communicating with government departments and giving evidence to parliamentary committees. The position has inspired exaggerated claims that the City possesses a secret lobbyist sitting inside Parliament with special legislative powers. It does not. The reality is less conspiratorial but arguably more revealing: a municipal government has maintained a permanent institutional mechanism for following Westminster legislation for more than four centuries because protecting City privileges and commercial interests has always required paying close attention to what Parliament is doing.

Other anomalies are scattered across the Corporation of London. The Square Mile has its own police force, formally separate from the Metropolitan Police since the City of London Police Act of 1839. The Corporation is London's port health authority and manages Epping Forest and Hampstead Heath despite both lying miles beyond the City. An ancient fund now called City's Estate, built from property, land, bequests and investments accumulated over centuries, finances activities without drawing on ordinary local taxation. A still older charitable endowment, City Bridge Foundation, grew from medieval gifts made for maintaining London Bridge; it now owns and maintains Tower Bridge, London Bridge, Southwark Bridge, Blackfriars Bridge and the Millennium Bridge, while also operating as a major charitable funder. The medieval City did not leave behind merely costumes. It left behind assets.

For centuries all this civic machinery operated beneath a skyline dominated by church towers and, after 1710, the dome of St Paul's. The modern financial skyline is startlingly recent. Tower 42, originally the NatWest Tower, was completed in 1980 and at 183 metres became London's first true skyscraper and the tallest building in Britain. Richard Rogers's inside-out Lloyd's Building

The transition was violent as well as economic. An IRA bomb destroyed the historic Baltic Exchange in St Mary Axe in 1992; another enormous bomb at Bishopsgate in 1993 badly damaged Tower 42 and surrounding buildings. The Baltic Exchange could not be successfully reconstructed and was eventually replaced by Norman Foster's 30 St Mary Axe, completed in 2004 and instantly nicknamed the Gherkin. The building helped establish a new architectural identity for the City: individual, highly engineered towers rather than the repetitive office slabs of earlier decades. The Leadenhall Building became the Cheesegrater, 20 Fenchurch Street the Walkie Talkie, while 22 Bishopsgate rose to form the current peak of an increasingly dense eastern cluster.

Yet even the skyscrapers are constrained by the past. The City has protected certain views of St Paul's since the 1930s, and modern planning policy deliberately concentrates much of the tallest development east of the cathedral. From the South Bank, the skyscrapers are intended to rise as a separate cluster rather than swallowing Wren's dome. This produces one of London's defining visual relationships: a seventeenth-century cathedral separated by protected sky from a forest of twenty-first-century offices. The skyline looks accidental, but to a surprising extent it is curated. Every proposed tower must negotiate not only surrounding buildings but sightlines towards monuments hundreds of years older.

The modern City's economy is also broader than its popular stereotype. Finance remains dominant — around a third of jobs — but professional services such as law, accountancy and consultancy provide another large share, and technology now represents roughly 14 per cent of employment. In 2024 the Square Mile supported about 676,000 jobs, a record and roughly a quarter more than before the pandemic. The City Corporation estimates annual economic output at over £100 billion. What began as a Roman port and medieval market has become a dense concentration of capital, legal expertise, insurance, technology and professional services whose influence extends far beyond its physical boundary.

The most striking thing about the City, however, is not that it became rich. Many cities became rich. It is how much of the machinery created during earlier stages of that wealth survived into the next one. Merchant guilds became charitable livery companies but kept a role in civic elections. The Mayor became the Lord Mayor and lost much practical power but retained international and ceremonial influence. Medieval wards became electoral districts. A bridge fund accumulated enough wealth to become a modern charity. An office created under Elizabeth I still scrutinises Parliament. An independent police force remained when the rest of metropolitan London acquired the Met. The City's boundaries persisted while London expanded around them until the original town became a tiny patch in the middle of a metropolis of millions.

This continuity can make the City seem more mysterious than it really is. Its institutions attract mythology because they look so unlike the standard structures of modern government. But the City is not powerful because a medieval charter secretly exempts it from Britain. Its more durable achievement has been the opposite: it repeatedly adapted its ancient structures sufficiently to avoid becoming obsolete. Parliament can reform it. The Crown no longer depends upon the Lord Mayor for loans. The livery companies cannot control most trades. The City wall has almost disappeared. Yet the institutions remain because each acquired another purpose.

That is why the best place to understand the Square Mile may still be Guildhall.

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