London The Financial Capital, Since When?
London has the reputation of being the financial capital of the world. However, is this a new title, or, is it something that has been earned over many, many years?
Undoubtedly, the world of finance has exploded over recent decades. Restraints such as the Gold Standard, and 'innovations' such as hedge funds, credit bubbles and so forth, have made the world of finance more important than at any time before.
In ages past, power was concentrated in the hands of Kings, Empires, and Religious leaders. However, in recent times, those with the most power are often more likely to be found behind the scenes, pulling the strings in international markets. Kings and Queens have been replaced by CEO's and CFO's. Think Apple, Microsoft, and Google, and you can understand how corporations with billions of dollars have more control than any Queen or King could ever aspire to. And, with all of this money, the merchants of these billions need a base. London has become the seat of power for those mechanisms.
London - It's Rise To Power
Every empire has a starting point. London's rise to power, in this instance, is not when the British Empire rose, but, rather, when it's development as the Financial Capital of the vast Empire of Money arose.
Since today there are many, many corporate power bases, such as Seattle for tech, Beijing for exports, and Germany for automotive excellence, becoming the financial capital of the world would invite overwhelming competition if it were a new title.
Fortunately, for London, the crown of being the financial capital of the world is not a new appointment. In fact, it's roots extend back to the 1600's. Britain, with London as it's flagship city, had reached it's influence into the far corners of the world. Because of this, London had become established as a business centre by this time.
Now, of course, banking is intrinsic to any financial capital. So, around 1694 the Bank of England was formed. This is the second oldest bank in the world, and a key rung on the ladder to financial capitalism.
And so, with the foundations laid, London was able to keep one step ahead of the competition. For instance, around a hundred years after the inception of the Bank of England, the London Stock Exchange consolidated London's economic dominance.
Changes Afoot, But Power Maintained
Of course, the London Stock Exchange is no longer the top stock exchange in the world. That battle was lost, however the war is still firmly on the side of London. Why is that so?
Whilst it is true that the London Stock Exchange is no longer all conquering, it still remains the vehicle of first choice for many business and banking entities today.
And, whilst other Stock Exchanges are ahead of London's, the Capital's location and transport has proven pivotal in maintaining it's dominance as the Financial Capital of the World.
London is conveniently located between East and West. It has doorstep access to Europe. And, when it comes to transport, it's extensive rail, air and shipping connections have proven appealing to business entities the world over.
The Current State of Play, and Future Cloudy Horizons
To this day, corporations such as HSBC control more than 7500 branches around the world from London. Other banks such as Barclays, and Deutsche Bank likewise still call London home.
However, will this always be the case? Recent efforts of London to 'divorce' itself from the EU have caused clouds of uncertainty to appear on the horizon.
How will the barriers of a no longer interconnected continent affect London's hold on power? Time will tell. However, whether or not London maintains it's crown of World Financial Capital, it has served as capital of an empire, a financial empire, for many centuries.