London today is the political and financial capital of Great Britain. It began, however, as a Roman stronghold, and following the Romans departure, the Anglo-Saxons and then the Normans controlled it. London grew considerably during the medieval period and, by the sixteenth century, was primed to be the center of unprecedented growth. Most of this can be attributed to the city’s economic development. Located on the Thames River with easy access to the North Sea, London became a center of shipping and commerce. Large corporations were based there, which brought further wealth. Finally, when the Industrial Revolution began, London was transformed even more and had become the financial center of the world by the nineteenth century.
The Romans conquered Britain in 43 A.D. and founded London—called Londinium by them—as a garrison town, and it became a center of seaborne trade soon afterward. London’s location was ideal: It was centrally situated on the Thames River far from the coast but not so far inland that ships could not navigate upriver to it. As such, it became a center of trade in Roman Britain and may have had as many as 60,000 people at its height. But the fall of the Roman Empire in the fifth century resulted in the Roman abandonment of Britain, so, for some time, London was virtually empty. Anglo-Saxon incursions led to the reoccupation of the area, but Viking invasions and decades of instability meant that the region saw little economic growth. When the Normans invaded from France in 1066, they chose London to their center of government, which began the city’s revival.
During the mid and late Middle Ages, London expanded as both a town and economic center when the European world became more connected due to the increased shipbuilding and maritime trade. London was poised to take advantage of this thanks to its geographical location and political power. The city continued to grow in size and wealth throughout the medieval period as well as during the Renaissance. When Britain began to gain colonies in the Americas and elsewhere in the sixteenth century, fabulous amounts of money started finding their way to London.
At that time, mercantilism is the reigning economic philosophy in Britain. It called for the protecting of British trade between the home island and its colonies. The government accordingly enacted laws that imposed taxes on imports and protected British trade. The main objectives were to attain a trade surplus and to amass gold and silver. One result of this mercantilist philosophy was that extraordinary wealth poured into London. At the center of all British economic activity, London grew rapidly and expanded in size and population during this time.
At the same time, the founding of several great companies and institutions paved the way for London to become the center of world trade and finance. The British East India Company, for instance, was granted a monopoly on trade in India. It was based in London, so many treasures from India made their way there. The company had to raise money for its initial ventures, so it sold shares of stock that gave investors pieces of the wealth it was amassing. This helped establish the London Stock Exchange, which had its humble beginnings in London’s coffee shops, where merchants gathered to trade stocks and to learn financial news from around the world. Other important institutions, such as the Bank of England and the insurance firm Lloyd’s of London, were started then as well.
During the eighteenth century, the Industrial Revolution caused the British economic philosophy to change from mercantilism to capitalism. Trade with overseas colonies became less important when investors in factories started becoming rich. Britain initiated a policy of free trade, sought to establish a worldwide market, and traded products from its manufacturing industry with anyone who would purchase them. London was at the center of this economic action. The development of fast steamships, the telegraph, and the telephone in the nineteenth century connected London with the entire world, so it became the world’s financial center. Its banks were used to transfer funds worldwide, its financial institutions provided capital for investors, and its docks and warehouses were filled with raw materials and goods from around the world. Unfortunately, the onset of World War I in 1914 brought this entire system to a halt.
21. The word primed in the passage is closest in meaning to ________.
22. According to the paragraph 2, the Romans left London because ________.
23. In paragraph 3, the author uses shipbuilding and maritime trade as example of ________.
24. The author’s description of mercantilism in paragraph 4 mentions which of the following?
25. In paragraph 5, the author’s description of the British East India Company mentions which of the following?
