Growth of London and its impact on Economic Development

Question 1

By the mid-17th century, London became…

Answer 1

the largest city of Western Europe.

Question 2

What was the population of London in the mid-17th century?

Answer 2

Around 400,000.

Question 3

What was the population of London by 1700?

Answer 3

575,000.

Question 4

Why was London ideally placed to power the economy?

Answer 4

• It was at the heart of the road and shipping network

- It could support the increasing demand for goods as well as being home to the new investment banking industry

Question 5

London’s economy grew as a result of…

Answer 5

a number of minor developments that happened to occur at the same time, rather than any one major advance in a particular area.

Question 6

London grew as a result of what industries?

Answer 6

• Banking and insurance
• Law
• Transport
• Skills and education
• Markets

Question 7

What did the banking and insurance industry do for London?

Answer 7

Provided employment as well as the capital needed to maintain merchants and businesses.

Question 8

Why was the legal system important for London?

Answer 8

London was the centre of the legal-system, with the Inns of Court, where legal training took place, all in the City, and most high-profile lawyers were based there.

Question 9

Why was transport important for London?

Answer 9

It has been improving since Tudor times, with investment in some roads and with the River Thames navigable for much of its length.

Question 10

Why was demographic growth important in London?

Answer 10

It surpassed other towns, as the wealth of opportunities made it a more attractive place to live and work.

Question 11

Skilled and educated workers were more likely to move to London, as…

Answer 11

it offered more than simply subsistence work.

Question 12

Why was the number of markets in London important?

Answer 12

It meant that London was the focal point for economic activity in the South East and, by the middle of the century, the national prices of livestock, grain and cloth were dictated by the London market.

Question 13

Why would the son of a wealthy landowners, who wanted to gain favour at the royal court, naturally gravitate to London?

Answer 13

If they failed in politics, they could forge a career in the higher echelons of the military especially the Admiralty, which was also based in London.

Question 14

What companies, whose interests were in trade and exploration were based in London?

Answer 14

• East India Company (1600)
• The Levant Company (1581)
• The Muscovy Company (1555)

Question 15

By 1688, not only was London at the centre of British trade but it was also the hub of a…

Answer 15

European market that relied on the port of the City.

Question 16

How did merchants respond to the risk associated with trade increasing?

Answer 16

They became acutely aware of the need to insure their ships and goods, leading to a boom in the insurance industry.

Question 17

Banking was essential for the development…

Answer 17

of both the British economy and international trade.

Question 18

Who opened the Royal Exchange in London in 1571, after obtaining loans from the money market in Antwerp?

Answer 18

Sir Thomas Gresham.

Question 19

The growth of lending was made possible by the…

Answer 19

lowering of interest rates, with the legal limit for interests rates.

Question 20

What were the legal limits for interests from 1571 to 1714?

Answer 20

• 1571 - 1624: 10%
• 1624 - 1651: 8%
• 1651 - 1714: 6%

Question 21

The reduction in interests made…

Answer 21

credit more attraction, and banks and brokers were needed to provide it.

Question 22

Brokers established networks of…

Answer 22

contacts who could provide money, particularly in London, with rates being offered below the legal limit in times of surplus.

Question 23

Define Marine Insurance.

Answer 23

Financial coverage provided against risks to shipping including loss or theft of a ship or damage to cargo.

Question 24

The growth of insurance was instrumental in fostering…

Answer 24

the economic conditions required for successful trade and an expanding empire.

Question 25

Although marine insurance was well established by the 17th century,…

Answer 25

a developed industry didn’t appear until after 1688.

Question 26

What was the purpose of a marine insurance law, and when was it introduced?

Answer 26

1601:

- In order to regulate the market and create a separate ‘Assurance Court’ to deal with insurance matters

Question 27

In the first half of the century, many British merchants were reluctant to…

Answer 27

part with large amounts of money in order to take out insurance due to the high rates charged for premiums, and it was common for as little as half of the value of goods on a ship to be covered.

Question 28

London merchants began to replicate the Dutch in seeing the…

Answer 28

calculation of risk as a wise practice, and the use of insurance services increased.

Question 29

In the course of the 17th century, marine insurance prices to all destinations…

Answer 29

dropped by ip to 75% and London became to leading insurance market in the world, insuring against piracy, fire and natural disaster.

Question 30

Would would eventually develop to become the world’s first insurance market?
Why was it important?

Answer 30

• A coffee house opened by Edward Lloyd in 1688
• It was important because Lloyd welcomed merchants and ship owners to share everything from weather conditions to the latest prices of tradable commodities

Question 31

In 1627, an office had been created within the Royal Exchange to deal with the insurance of…

Answer 31

ships and fire, and records exist of a scheme created by Charles I in 1638 to insure London citizens and business owners against fire, though this was disrupted by the outbreak of the Civil War.