Geografia d'Europa: textos de suport

• INTRODUCTION
• CITY RESEARCH PROJECT
• CORPORATION OF LONDON HISTORY

The City of London is the world's leading international financial and business centre. The diversity and extent of institutional participation by banks, brokers and securities firms from around the world brings a depth of liquidity and flexibility of approach to its financial markets. In addition to the scale, depth and diversity of its international financial markets, professionalism and worldclass skills underpin the services it offers.

London's breadth of international financial dealing is quite remarkable. Straddling the world's time zones between Asia and America, it is unique as a centre where international issues and international markets dominate.

London is the heart of the world's financial business and the centre of financial innovation and information. Its supportive legal, regulatory and fiscal regimes are underpinned by a highly efficient technological infrastructure and an unrivalled concentration and variety of expert services. In addition to its financial and physical infrastructure and magnificent working environment, the City also benefits from dedicated and expert local government. The Corporation of London draws on over 800 years experience of supporting the financial infrastructure and providing the quality of service appropriate to a leading world centre.

"Confidence is justified, but there is no scope for complacency". That is the message from a wide-ranging study completed in Summer 1995 on London's position as a leading global financial centre.

Even as competition heats up between cities in Europe, North America and Asia, London looks likely to stay ahead thanks to strength in labour skills, its highly developed markets and its supportive regulatory environment. The study, known as the City Research Project (CRP), was carried out by the London Business School on behalf of the Corporation of London, which manages local government for the City of London - the area boasting the greatest concentration of international banking and financial services in the world.

A Major Industry

The importance of financial services for the UK economy is a key highlight of the report. Together with other business services, they now account for about a fifth of Britain's gross domestic product, approximately the same size of the manufacturing sector. In many of these services, London has a leading market share and can rightly be regarded as the pre-eminent international centre, including foreign exchange trading 1/3 of world turnover international bank lending to non-residents cross border equity trading international fund management international bond underwriting and trading marine and aviation insurance shipbroking base metals futures trading

Technology Should Help

The researchers considered whether advances in communications technology would reverse the benefits of consolidating financial services in a small area such as the City. Some have suggested the accelerating pace of technological change could allow for a greater dispersal of activities and lead firms to become more footloose. However, drawing on the history of other technological changes, including the electric telegraph and the ticker tape, the report concludes otherwise. Such developments tend to lead to increased concentration in previously established areas.

Competitive Advantages

Among London's strategic advantages mentioned in the report are the supportive and respected regulatory, taxation and legal systems operating in the UK. While the general environment could be replicated by rival centres, it would be more difficult to copy the advantage of a large and skilled workforce in financial services. This human capital grows steadily through the passing on of skills developed via shared work experience - something more difficult to achieve in smaller centres. Similarly, support services such as accountancy, legal advice, printing, computing and communications technology are abundantly available in London in a way that they cannot be in smaller centres.

Structural Concerns

The study does address potential problems such as the difficulty the City has in speaking with a single voice, largely because of the tremendous diversity of the business interests. Simple reliance on market forces to determine the best procedures is not enough, and greater co-ordination between City bodies is needed, the report says.

The project also points to possible threats to the financial industry posed by some inadequacies in the London transport system and emphasised the need for further investment in infrastructure. The transport situation is aggravated by the fact that responsibility for the system is fragmented. Improvements might be made possible by using road pricing to provide extra funds or levying a property tax on business in order to directly access those who would benefit from the transport improvements.

Regulatory Concerns

London as a financial capital has benefited from a generally benign attitude among the nation's political parties, a pragmatic tax and regulatory framework and a relatively predictable and sensible legal system, the CRP suggests. This positive environment is largely because of the widespread understanding among politicians of the importance of international financial transactions to London. By contrast, the regulatory systems of the USA and Japan have typically been designed to reflect perceived local interests. In a similar way, there are some risks in the future that London's position might be threatened by regulatory changes made by the European Union. Fortunately, implementation of EU directives concerning financial markets is in the hands of authorities such as the Treasury, the Bank of England and the Securities & Investments Board, who are highly alert to these dangers.

Avoiding Erosion

The report's authors conclude that the City of London's extraordinary position is not seriously under threat. It adds, though, that "a competitive advantage which is not properly understood and appreciated is subject to erosion through ignorance and inattention. We believe the City Research Project has contributed greatly to the avoidance of this fate."
 
 

The City Research Project

(1) This report presents the conclusions of The City Research Project, a 3-year research study into the international competitive position of London in financial services. The work was funded by the Corporation of London and was overseen by a Governing Body, chaired by Mr Stanislas Yassukovich. The project was a collaborative study managed by the London Business School and involving academic economists and consultants.

(2) The project had three aims. The first was to collect and bring together a wide range of data relating to London's financial services. The second was to describe and analyse the activities of the City and the sources of its competitive advantage, and the third was to stimulate debate about the future by suggesting possible directions for change.

(3) This Report provides an assessment of London's competitive position and makes a number of recommendations aimed at strengthening this position. In doing so it draws on a series of 26 detailed reports that the Project has published on specific aspects of London's competitive position. These are listed above.

(4) In the preparation of the 26 reports we received considerable assistance and valuable comments from both the Governing Body and from members of many City firms. Indeed, there were occasions on which we felt that the competitiveness of the City could best be served if we stopped asking questions. We are grateful to all those who helped us. We should emphasise, however, that the authors of the reports are responsible for any errors and for the views expressed in their reports. These views are not necessarily those of the Governing Board or of the many people who sent us their comments.

(5) We refer frequently in this Report to the 'City' and 'London'. These terms are not intended to refer to a particular geographic area but rather to the variety of wholesale financial activities which are generally associated with the City. While there is heavy concentration of wholesale financial services in the City, other parts of London, South East England and Edinburgh are also important providers of these services.

(6) The Report is organised as follows. Section 1 is an introduction. Section 2 provides some estimates of levels of activity in London's wholesale services and of its market share. Section 3 looks at the fundamental economics affecting the location of financial services. We look at the pressures to concentrate activity and discuss how competitive advantage is affected by the ownership of strategic assets, the structure of relationships, reputation and innovation. Section 4 discusses the regulatory, legal and tax infrastructure, and Section 5 looks at two other aspects of the infrastructure, transportation and security. Section 6 looks at three supporting services: namely, legal services, accountancy and telecoms. Section 7 analyses the principal factors of production, property and labour. It also considers the development of professional and managerial skills. Section 8 considers the role of public bodies in regulation, promotion and standard setting. Section 9 looks at London's securities and derivatives exchanges. Section 10 considers the competitive position of major sectors and activities, namely international banking, the sterling money market, general insurance, marine financial services and fund management.

(7) In the remainder of this summary we highlight some of our principal conclusions.
 

The City's contribution

(8) There are three major international financial centres - London, New York and Tokyo. While a substantial proportion of New York and Tokyo's business is domestic in origin, London is pre-eminently an international centre and can be regarded as the only true world centre. It is among other things the world's largest centre for foreign exchange trading, international bank lending to non-residents, marine and aviation insurance, international bond underwriting and trading, cross-border fund management, metals futures trading, and shipbroking.

(9) Financial services in the UK are a major industry. The broad church of finance and other business services now accounts for around a fifth of UK GDP. More narrowly, we estimate that international wholesale activities, which are centred primarily in the City, employ some 150,000 people and generate output of £10-15bn a year.

(10) Financial services output in the UK has been growing more rapidly than GDP. For example, output of the principal wholesale markets with which we are concerned is estimated to have roughly doubled in nominal terms between 1986 and 1992. This rapid growth is characteristic particularly of some of the newer products such as swaps and related products, financial futures, underwriting of international equities and short-term paper. It is also true, however, of some of the older markets, such as foreign exchange, international bond underwriting, shipbroking, and metals futures.

(11) In some of the more mature markets, such as bank lending and general insurance, London has lost some market share; but this has been offset by rapid growth in new products, where London often has a dominant market position.

(12) In Section 2 of this Report we provide some data on UK turnover, revenues and market share of specific activities. However, we also draw attention to the serious absence of data in many areas, which makes it almost impossible to assess the relative importance of some activities or to monitor changes in London's position. We believe that it is important that steps are taken to improve the quality of data.

London's competitive strengths

(13) The pervasive and persistent pressure for financial services to concentrate in a small number of centres suggests that there are some fundamental economic forces encouraging this centralisation. We analyse these forces in Section 3 of this Report. Established centres, and London in particular, have several sources of competitive advantage. They have important strategic assets in the form of a large and skilled labour market; they benefit from a range of supporting services such as legal services, accountancy, telecoms, specialised computing support, and a wide range of information providers; they have well-developed legal, regulatory and tax frameworks; and they have deep and liquid markets. Equally, financial centres rely heavily on reputation and a network of personal relationships that help to establish trust.

(14) These advantages to established centres are not easily replicated. Moreover, many of the benefits arise from external economies, so that each firm derives benefits from the proximity of others. These external economies help to reinforce the position of established financial centres.

(15) It has been suggested that developments in telecommunications will lead to a dispersal of financial services. We do not share this view. Indeed the principal effect of improvements in communications has been to encourage centralisation of activity by allowing centres to serve wider hinterlands, most of all in securities transactions.

(16) Just as financial services in federal countries have tended to concentrate in a single major centre, we believe that there are strong economic pressures for such services to concentrate within Europe, and London as the major established international centre should benefit from this. Of course this does not imply that national financial centres within Europe cannot continue to thrive.

The threats to London's competitive position

(17) Increasingly, large urban centres tend to compete with each other. Continental financial centres, such as Paris and Frankfurt, have taken measures to protect or improve their financial sectors, and this has led to much recent discussion as to whether London will lose its advantage. These developments on the Continent are clearly important to London. However, we should also warn against the view that the future for London's financial services hinges on the outcome of competition between monolithic centres. There are three reasons for this warning:

(a) London's growth in business depends importantly on worldwide growth in financial services, which is affected by both the level of trade and the international regulatory framework:

(b) Activity in different financial centres is often complementary, so that banks (say) may locate origination abroad but concentrate their trading operations in London:

(c) Competitive threats to London's financial services are likely to be very specific and may sometimes originate from 'niche' centres, such as Luxembourg in fund management, Bermuda in insurance or Piraeus in shipbroking. However, it is important not to confuse the volume of business booked in a particular niche centre with the value that is added there. For example, despite the growth in the importance of Bermuda as an insurance centre, total employment in Bermuda's financial and business services has remained steady at about 5000 for the past five years

(19) If (as we believe) there are important forces encouraging concentration in financial services and major advantages to the incumbent centre, the principal threats to the City are most likely to be found where competition cannot be relied upon to correct defects. This points to the importance of both the physical and institutional infrastructure, and so in the remainder of this brief summary we highlight some important infrastructure issues. We note first some infrastructure issues that are the responsibility of the City. Subsequently we discuss those where the government has a major role.

Co-ordination of Policy

(20) There is a wide range of issues as to how the City develops common policies, promotes itself, educates itself, establishes protocols and reacts to crises. These are problems that involve coordination between City bodies and therefore the solutions cannot necessarily be left to market forces.

(21) Promotion is a major responsibility of the Corporation of London, British Invisibles, London First Centre and many of the trade associations. Thus the responsibility for promotion is fragmented. Also several of the bodies involved have remits which go far beyond London or financial services. Yet their responsibilities do not embrace both inward investment by financial institutions or ensuring that existing institutions increase their volume of business in London. We would like to see the development of a more focused approach to the promotion of financial services.

(22) The Bank of England has taken a leading role in promoting the efficiency of financial services and sometimes intervenes in the event of what the Bank sees as a market failure. This is an unusual role for a central bank, but it is one which the Bank of England has played successfully. It is important, however, that the Bank retains the trust of the City in its interventions and does not intervene when there are market solutions to the problem. We suggest some broad criteria.

(23) Trade associations have a major part to play in ensuring that legislation and regulation is supportive and up to date. The Financial Services Act and the growing influence of EU legislation have increased the role of trade associations and made it more important for them to have full-time professional staff. This in turn has increased the minimum efficient size of trade associations. A number of mergers have already occurred, but others may still be needed. In general the consultation process appears to work well and the main criticisms are directed at the UK's implementation of EU directives, which is felt to be less flexible than in other countries. If so, the explanation may lie in the English legal system, which is based on a system of precise drafting. This is a potential danger to the City, as EU law will be difficult to change and the ability of legislation to adapt to changing financial conditions will remain the responsibility of the individual country.

The Development of Exchanges

(24) A second set of structural issues relates to London's exchanges. Technology has caused these markets to be increasingly contestable, so that exchanges compete both with each other and with commercial companies. This has profound effects for the centralisation of markets, the extent to which exchanges should be vertically integrated and the ways in which the are financed and governed. We discuss some of these implications in Section 9 of this report. Physical infrastructure

(25) We turn now to those issues where government has a major responsibility. Much of the discussion of London's prospects focuses on its physical infrastructure. Some of the concerns here seem misplaced. For example, it is often suggested that London suffers from congested streets, high property prices and high salary costs for professional staff. These are generally evidence of a healthy local economy rather than the reverse. For example, property rents simply measure the relative attractiveness of difference locations, so that rents as such are unlikely ever to cause business in aggregate to leave a centre.

(26) There are many factors which affect whether London is an attractive place to live and locate a business, but London's transport system is one that frequently attracts criticism. It is not clear how far deficiencies in transport are having an impact on the competitive position of the City. However, there are important issues in how London's transport system is organised and paid for, and we put forward some suggestions.

(27) We do not believe that efficiency is synonymous with a simple organisation chart. However, we show that responsibility for London's transport is very fragmented. We suggest that there are gains from simplifying the structure, and we put forward several more or less radical proposals.

(28) Because London's transport is a small fish in the large sea of government expenditure, funding is susceptible to changes in government expenditure policy, and this has hindered long-term investment planning. This is compounded by the approval process for transport projects, which appears to be less effective than in the Netherlands, Germany and France.

(29) There is unlikely to be a major role for privately financed transport projects in Central London. But any increase in investment needs additional sources of finance, and this implies a recognition that individuals or businesses based in the City will need to contribute in one way or another. There is some scope for fare increases, but these are unlikely to provide all the finance that is needed. We therefore suggest two possibilities.

(a) Road pricing in Central London must almost certainly be coming closer and could provide additional funds for public transport and lead to more efficient road use.
(b) Another approach would be through a property tax on businesses, which would tax directly those who benefit most from transport improvements.

(30) Of the three international financial centres, London has historically benefited from a benign political attitude, a pragmatic regulatory framework and a sensible and predictable legal system. In part this arises from the special importance of international financial transactions to London and the consequent need to adapt regulatory rules to this business. By contracts, the regulatory systems of the USA and Japan have traditionally been designed in the light of perceived domestic interests.

(31) There is no doubt that the location of financial services is very sensitive to differences in tax and regulation, and probably increasingly so. In the past London has clearly benefited from ill-judged tax and regulation by other countries, notably the US Regulation Q and Interest Equalisation Tax, which prompted development of the Euromarkets. Correspondingly, if changes in tax and regulation were to make London a relatively costly place to locate financial businesses, it could rapidly lose its leading position in international finance. That said, it is wrong to think of London's competitive advantage as deriving simply from its regulatory system. London has never been simply a booking centre, and in any case tax and regulation are too easily copied to form the basis for sustained competitive advantage.

(32) It is often suggested that deregulation in other centres and international harmonisation of regulation is causing London to lose its advantage, and there is almost certainly some truth to this view. However, it is also necessary to look at the other side of the coin, for lower transactions costs and liberalisation of capital flows has meant that business can more easily flow to the centre with the lower regulatory burden. On this reading deregulation by the more heavily regulated centres is the reverse side of the coin to the increasing threat posed by London.

(33) There is a common view that the UK regulatory system imposes excessive costs on firms and yet has failed to correct abuses or provide adequate protection. Many of the perceived problems relate to retail financial services, but the backwash is liable to affect wholesale markets.

(34) In the Report we suggest some regulatory principles:

(a) The purpose of regulation is to alleviate market failure, which are typically connected with (i) systemic risk, (ii) fraud or (iii) lack of information. The purpose should not be to protect investors from risks which the market can reasonably assess.
(b) If the regulatory system is unable to provide investor protection, there should be compensation; but this should always include a deductible to ensure that the investor is subject to the principle of caveat emptor.
(c) The focus of regulation should be primarily on retail markets; wholesale investors should as far as possible be exposed to the principle of caveat emptor.
(d) Where possible, regulation should employ market, rather than administrative, solutions to market failure.
(e) The efficiency of the regulatory structure is likely to be improved by the SIB focusing as far as possible on standard-setting rather than on detailed rule-making.

(35) Since the passage of the Financial Services Act there has been widespread concern about the costs of regulation but almost no attempt to measure these costs. We provide some estimates which suggest that the direct costs of regulating securities and investment activities are broadly comparable with those in the USA and France. In addition to the direct costs of regulation, there are substantial compliance costs. In the case of the investment management and securities industries in the UK we estimate that compliance costs amount to about two to three times the direct costs. Total costs of regulation in these businesses are estimated to average 3-4 percent of net operating expenses. This level of costs is significant, and it is important that regulation provides 'value for money'. We propose in the Report several changes which would help to emphasise the value-for-money aspect of regulation.

(36) One of the dangers to London is the politicisation of regulation. Since financial services form an important part of economic activity in the UK, this may not be such a problem with domestic rule-setting. However, the more serious threat comes from the shift in decision-making to the EU. We note four sources of difficulty:

(a) Harmonisation of regulation is likely to result in rules which are less well-suited to individual markets or institutions.
(b) Harmonisation may make regulation more remote from practitioner expertise. For example, our analysis of alternative capital adequacy rules for equity market makers suggests that current proposals for capital requirements for equity market-makers are naive compared with industry practice. On the issue of expertise we are in sympathy with the suggestion of Alan Greenspan that the complexity of many financial transactions means that the role of regulator should be to approve banks' risk control systems rather than devising their own.
(c) International agreements are hard to reach, so that there is likely to be a reluctance to adapt them as shortcomings are revealed and markets change.
(d) Regulation becomes politicised, so that rules are the outcome of a bargaining process. One consequence is that financial services shift out of the EU to more hospitable centres.

(38) In the past there have been several examples of long delays in tax reform, eg over the taxation of foreign exchange gains and losses, options and over surplus ACT. There have been a number of changes in practice that have alleviated these problems. Delays in the response to tax problems arise partly from the complexity of many of the issues. We suggest that this calls for a wider involvement of outsiders in the tax reform process. Uncertainty of tax treatment can also put a financial centre at a competitive disadvantage. We suggest that presettlement or ruling might be used to reduce uncertainty in tax treatment.

(39) Changes in practice have alleviated some of London's persistent tax problems. For example, an important tax reform in response to a competitive threat was the change to the treatment of surplus ACT. Our analysis shows that in this respect London has become a relatively attractive place to locate a European headquarters.

(40) We focus in this Report on the taxation of financial transactions. However, London's ability to attract overseas financial institutions depends also on personal taxation, particularly of expatriate staff. As many of the tax reliefs for expatriate staff have been phased out, an increase in income tax rates would seriously reduce the attractions of the City for international institutions.

EMU

(41) Possibly one of the principal uncertainties for the City centres on EMU when it will be achieved, whether the UK will be a member and how the European System of Central Banks (ESCB) will operate. EMU will almost certainly raise the stakes by bringing about the complete disappearance of some markets and the considerable expansion of others. With a single currency there will be little distinction between money and bond markets in difference member countries. This could lead to major changes in the liquidity of the cash markets, with the major government bond and paper markets increasing in depth but others becoming less liquid. Similarly, trade in interest rate futures is likely to concentrate on the obligations of one government so that most of the existing interest rate contracts will evaporate. Intra-European foreign exchange dealing and associated currency swaps would also disappear. These represent a relatively small proportion of London's business, and its loss could well be more than outweighed by the concentration in London of transactions between the Ecu and other currencies.

(42) The impact of EMU on London will depend to a large degree whether the UK is a member. Of the optimistic versions of the story the most plausible sees the UK as a full member with London and the Bank of England playing much the same role as New York and the New York Fed do in the USA. But even so there would be strong political resistance to a concentration of money market activity, which would not fit well with the decentralised role for the separate central banks which was envisaged in the Maastricht Treaty. If the UK were outside EMU, an optimistic story would have to depend on the member countries adopting onerous reserve requirements or imposing other restrictive policies, so that London captured a large volume of offshore European banking business. But this is a harder story to tell and there are less happy versions in which a liquid Ecu money market and a market in associated derivatives develop on the Continent.

(43) There are too many uncertainties about EMU to foretell its effect on the City, but we suggest several steps which could usefully be taken to harmonise the Bank of England's operating procedures with those of other central banks and to increase the liquidity of domestic money market instruments. These include widening the range of instruments and the number of institutions with which the Bank of England deals, encouraging an open repo market, and paying Exchequer receipts in the first instance into bank accounts held with the commercial banks.
 

CORPORATION OF LONDON HISTORY
 

With a history dating back over 800 years, the Corporation of London is older than Parliament itself. While successfully fulfilling its role as a modern local authority, the Corporation respects and preserves its rich historical legacy. The ancient civic offices of the Lord Mayor and Sheriffs are still an integral part of this modern organisation. Centuries-old traditions such as the Lord Mayor's Show and the Freedom of the City, which are still carried out today, bring London's history to life. The Corporation also owns and cares for a number of unique historic buildings and monuments, preserving them at its own expense for the benefit of the nation.

From medieval times the City of London developed a unique form of government which finally emerged as the first independent local authority in Britain. Its constitution is rooted in the ancient rights and privileges enjoyed by citizens before the Norman Conquest in 1066.

The rights of the City to run its own affairs was gradually won as concessions were gained from the Crown. London's importance as a centre of trade, population and wealth secured it rights and liberties earlier than other towns and cities. From medieval to Stuart times the City was the major source of financial loans to monarchs, who sought funds to support their policies at home and abroad.

That London enjoyed certain freedoms and had a form of civic administration before the Norman conquest can be seen in the Charter granted by William the Conqueror in 1067, in which he promised to recognise the rights, privileges and laws that the City had enjoyed since the time of Edward the Confessor (1042-62).

In Saxon London and in the medieval period, municipal authority rested principally with Aldermen ('elder' men), who met in the City's ancient Court of Husting - the supreme court of the medieval City, with administrative and judicial functions. There is reliable evidence of its existence in 1032 although it was probably much older and by the mid-12th century it was held weekly. It is likely that the Court of Aldermen developed from the administrative side of the work of the Court of Husting.

London, like other cities, was subject to the authority of the Crown through its Sheriff - the Shirereeve or Portreeve. But in the 12th century, as a move towards civic independence, an association of citizens under oath - the commune - was established. At the same time the office of Mayor was created and Henry FitzAilwyn took office in 1189 (whether by appointment or election is unclear).

In 1191 the commune was officially recognised by Prince John when his brother Richard the Lionheart was away at the Crusades, and in 1199 John, now King, granted the citizens of London the right to elect their own Sheriffs - a particularly significant right as the Sheriff was the King's representative through whom the City was governed. The citizens' right to elect a Mayor annually was granted by King John in a charter of 1215.

The commune may have been the origins of the development of another element of local government in the City. Gradually Aldermen began to summon 'wise and discrete' citizens from their Wards to their meetings for consultation on particular matters. In 1285 a group of 40 citizens, one to four from each Ward, were to consult with the Aldermen on the common affairs of the City. From 1376 this assembly had regular meetings and was known as the Common Council. It gradually assumed greater responsibilities and the business of the Court of Aldermen declined.

Today the Court of Common Council is the 'town council' of the City of London. Its work falls into two categories: the work of an ordinary local authority council and that arising from its historical status and tradition. It works through committees, like any other local authority, but it is unique in that it is non-party political.

Since 1384 Common Council has been elected by the wards of the City. Elections are held every year in December when all the seats are up for election or re-election. Each of the 25 wards return between 4 and 12 members depending on the size of the electorate. Candidates, men or women, must be freemen of the City and on the electoral roll of the City of London. The total number of councilmen, also known as Commoners, is 132.

Common Council, presided over by the Lord Mayor, meets every fourth Thursday in the Great Hall of Guildhall at 1pm. On ceremonial occasions and at the first meeting of a new Mayoralty, Common Councilmen wear fur-trimmed gowns of deep blue silk.

Both the offices of Sheriff and Alderman date back to the medieval ages and reflect their long-standing importance in the government of the City of London.

The office of Sheriff is of greater antiquity than any other in the City of London. Until the institution of the Mayoralty in 1189, Sheriffs or 'Shire Reeves' governed the City as the King's representatives, collected royal revenues and enforced royal justice.

Today two Sheriffs are elected on Midsummer's Day every year in Guildhall by the City Livery companies. Their duties include attending the Lord Mayor in carrying out his official duties, attending the sessions at the Central Criminal Court in the Old Bailey and presenting petitions from the City to Parliament at the Bar at the House of Commons.

Since 1385 when the Court of Common Council stipulated that every future Lord Mayor should "have previously been Sheriff so that he may be tried as to his governance and bounty before he attains to the Estate of Mayor", the shrieval year of an Aldermanic Sheriff is a sort of testing-ground for a person who aspires one day to be elected Lord Mayor of London.

References to Aldermen or 'elder men' can be traced back to Saxon times, but the first mention of an alderman of London by name appears in 1111. The Court of Aldermen administered the City before the evolution of the Court of Common Council but its functions contracted as those of Common Council developed. Today the full Aldermanic Court, summoned and presided over by the Lord Mayor, meets on about nine Tuesdays in the year in the Aldermen's Court Room in Guildhall. At Court of Aldermen meetings, aldermen wear violet gowns and fur-trimmed scarlet gowns and chains of office are worn on specified ceremonial occasions.

Aldermen have jurisdiction over their Wards and for centuries the 25 Wards of the City have each elected one alderman. Upon admission to the Court of Aldermen, an alderman automatically becomes a Justice of the Peace for the City of London. They also serve on Common Council committees, act as governors and trustees of a variety of schools, hospitals, charitable foundations and trusts with ancient City connections and are also occupied with livery companies, ceremonial events and freedoms of the City.

One of the most famous and ancient traditions of the Corporation of London is that of granting the freedom of the City.

The freedom of the City relates back to the medieval term 'freeman', meaning someone who was not the property of a feudal lord and who enjoyed privileges such as the right to earn money and own land. Town dwellers who were protected by the charter of their town or city were often free - hence the 'freedom of the city'.

Within the City of London whether you were a freeman also used to affect your ability to do business. No person born outside the City could become an apprentice to one of the guilds, which effectively controlled the business of their particular trade, unless he first swore that he was the son of a free man. Until 1835 membership of a livery company, the successors of the guilds, and freedom of the City were obligatory to all who wanted to exercise a trade in the City.

Today freedom of the City has fewer privileges but is still taken up by some 1,800 people from all walks of life every year. Any British or British Commonwealth citizen - man or woman - of good character, over the age of 21 may apply for the freedom in three ways: by servitude (for apprentices who have served a full apprenticeship to a freeman), by patrimony (for children of freemen) and by redemption (for freemen of livery companies and others who do not fall into the first two categories). The majority of admissions to the freedom today are by redemption, either by nomination or through a livery company.

Following approval of their application by the Court of Common Council, freemen take part in a short but solemn ceremony in the Chamberlain's Court at Guildhall during which they swear oaths of loyalty to The Queen and the Lord Mayor. Then they are presented with a parchment certificate known as their 'copy of freedom' and a book called Rules for the Conduct of Life, written by the Lord Mayor of London, 1737-8.

Although it has historical significance and value, the freedom of the City is not an honour or award except in the case of the Honorary freedom, the highest honour the Corporation of London can bestow. Honorary freemen do not apply for but are invited by the Court of Common Council to take the freedom. Usually reserved for royalty, statesmen, philanthropists and leaders of the armed forces in times of national crises, the Honorary freedom is the only way a foreign national may be granted the freedom of the City of London. Famous Honorary freemen include The Queen, Nelson Mandela, Theodore Roosevelt, Florence Nightingale, General Eisenhower and Winston Churchill, whose freedom was presented in a box made of oak from the blitz-destroyed roof of Guildhall. Although the freedom today confers no special privileges, many myths have grown up over the centuries about the special entitlements supposedly accorded to freemen. Some of them may have had some factual basis but no longer apply today - for instance, the legendary right of freemen to drive sheep over London bridge may have been based on the fact that medieval freemen were exempt from turnpike, bridge and market tolls. Neither are modern freemen entitled to be drunk and disorderly in the City without fear of arrest, carry a drawn sword in the City or dig up turf on Tower Green!

If you would like to find out about applying for the freedom of the City, please phone the Chamberlain's Court on 020 7332 3055. If you are interested in the origins of the freedom of the City, as well as the history of London, the Corporation of London and livery companies, full details can be found in Sheep over London Bridge: The Freedom of the City of London by Caroline Arnold.

The Declaration of a Freeman - "I do solemnly swear that I will be good and true to our Sovereign Lady Queen Elizabeth the Second; that I will be obedient to the Mayor of this City; that I will maintain the Franchises and Customs thereof, and will keep this City harmless, in that which is in me; that I will also keep the Queen's Peace in my own person; that I will know no Gatherings nor Conspiracies made against the Queen's Peace, but I will warn the Mayor thereof, or hinder it to my power; and that all these points and articles I will well and truly keep, according to the Laws and Customs of this City, to my power."

Trade and craft associations known as guilds or livery companies have flourished all over Europe for centuries, but the City of London companies, now collectively known as the Livery, are unique in their survival, number and diversity. Today's livery companies are not picturesque leftovers of history but living institutions, whose liverymen carry out important functions in the elections of the government of the City of London and certain of its officers.

The word 'guild' derives from the Saxon word for payment, since membership of these fraternities was (and is) paid for. The word 'livery' refers to uniform clothing as means of identification. Today, new companies in their formative years are usually referred to as guilds.

From medieval times until the mid-19th century, the livery was closely connected with the freedom of the City of London. Liverymen had to be freemen of the City, and in this way the Corporation of London managed to exercise a degree of control over the livery companies.

The early companies were the medieval equivalent of trading standards departments, checking quality of goods and weights and measures. They also controlled imports, set wages and working conditions and trained apprentices. After many years of fierce dispute, an order of precedence for livery companies was finally settled in 1515, starting with Mercers at number 1. In 2000 the 101st and 102nd livery companies were granted their charters.

Application for membership of livery companies varies; some only accept trade or trade-associated members but others embrace a wider membership. In keeping with their origins, livery companies continue to devote huge amounts of funds to charitable and educational organisations.

The social and economic conditions which gave birth to the medieval guilds have long since been overtaken by the development of industry and commerce, but in spite of this the Livery has survived and flourished. Some companies still own halls, schools, almshouses, investments, lands and substantial charity funds. They have a proud history, traditions, records, magnificent treasures and above all, many liverymen determined that their work should continue. Their survival today has been achieved by doing what they have always done, namely fostering their trade in a wide context, serving the community and introducing modern skills and professions.

Today the majority of companies support their trade, craft or profession in one way or another. Much of this support goes to universities and other institutions which train young people for careers in particular industries. A growing number of companies are also involved in either new or existing apprenticeship schemes.

The Livery also has a continuing role in commerce and trade. Several companies - such as the Goldsmiths Company, which has been responsible since 1300 for testing the purity of marking gold and silver wares - still have a continuing statutory or regulatory role, while others support related industries in a variety of ways.

The livery companies in order of precedence are:Mercers (general merchants), Grocers, Drapers, Fishmongers, Goldsmiths, Merchant Taylors (tailors), Skinners (fur trade) (these two companies alternate 6th and 7th position within the Great Twelve livery companies), Haberdashers, Salters, Ironmongers, Vintners, Clothworkers, Dyers, Brewers, Leathersellers, Pewterers, Barbers (also surgeons and dentists), Cutlers, Bakers, Waxchandlers, Tallowchandlers, Armourers & Brasiers (armour-makers and workers in brass), Girdlers (girdles and belts as clothing), Butchers, Saddlers, Carpenters, Cordwainers (workers in fine leather), Painter Stainers, Curriers (dressers of tanned leather), Masons, Plumbers, Innholders, Founders, Poulters, Cooks, Coopers (barrel makers), Tylers & Bricklayers, Bowyers (longbow makers), Fletchers (arrow makers), Blacksmiths, Joiners, Weavers, Woolmen (winders and packers of wool), Scriveners (writers of court letters and legal documents), Fruiterers, Plaisterers (plasterers), Stationers & Newspaper Makers, Broderers (embroiderers), Upholders (upholsterers), Musicians, Turners, Basketmakers, Glaziers, Horners, Farriers (shoers of horses/veterinary surgeons), Paviors (paving, highways), Loriners (stirrups and other harness for horses), Apothecaries (medicine), Shipwrights, Spectaclemakers, Clockmakers, Glovers, Feltmakers (hats), Framework Knitters, Needlemakers, Gardeners, Tinplate Workers, Wheelwrights, Distillers, Pattenmakers (makers of wooden clog-style footwear), Glass Sellers, Coachmakers & Coach Harness Makers, Gunmakers, Gold & Silver Wyre Drawers (gold and silver braid for uniforms), Makers of Playing Cards, Fan Makers, Carmen, Master Mariners, Solicitors, Farmers, Air Pilots & Air Navigators, Tobacco Pipe Makers & Tobacco Blenders, Furniture Makers, Scientific Instrument Makers, Chartered Surveyors, Chartered Accountants, Chartered Secretaries & Administrators, Builders Merchants, Launderers, Marketors, Actuaries, Insurers, Arbitrators, Engineers, Fuellers, Lightmongers, Environmental Cleaners, Chartered Architects, Constructors, Information Technologists, Water Conservators, World Traders

City companies without livery: Management Consultants, Parish Clerks; Watermen & Lightermen.

Companies awaiting livery: Fellowship of Hackney Carriage Drivers; Company of Firefighters.
 

A Mayor of London is first mentioned in 1189 when Henry FitzAilwyn was the first to hold office, although it was in 1215 that King John granted the City a charter to elect its own mayor. Since then, some 700 men and one woman have over the centuries held the position of chief officer of the City of London.

Perhaps the most famous of them all is Dick Whittington, who held office three times, in 1397, 1406 and 1419. Contrary to popular belief, Dick Whittington was not a poor, ill-treated orphan who managed against all the odds to work his way up to Lord Mayor. Coming from a wealthy family, Richard Whittington had a successful business and civic career before he became Lord Mayor. As for the black cat which supposedly helped him found his fortune by ridding the King of the Barbary Coast of a plague of rats, while no-one is quite sure how this part of the myth grew up, the fact is that Dick Whittington carved out a successful business career in a very practical way as a mercer (dealer in costly fabrics such as silk), wool merchant and royal financier.

Even the title of "Lord" Mayor did not exist when Richard Whittington held office. The form "Lord Mayor" was commonly used by about 1545, but the title was never specifically granted.

Although the legend of Dick Whittington may not bear close scrutiny, the Lord Mayor has throughout the centuries played a vital role in the life of the City of London and continues to do so today. In the City the Lord Mayor ranks immediately after the sovereign and acts as the capital's host in Guildhall and Mansion House, his official residence. On behalf of the City and the nation he carries out numerous engagements at home and abroad. Although in former years a person could become Lord Mayor as many times as the electorate would vote him in - Dick Whittington being such an example - nowadays one year of such demanding activity is considered enough.

The election of Lord Mayor is held at the end of September each year in the Great Hall of Guildhall. The assembly, known as Common Hall, consists of all liverymen of at least one year's standing together with certain high officers of the City. All aldermen who have served the office of sheriff and who have not already been Lord Mayor are eligible.
 

FUENTE:
Corporation of London
http://www.cityoflondon.gov.uk/