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Editor's note: This report contains accounts of rape, violence and other disturbing events.

Sex trafficking wasn't a major concern in the early 1980s, when Beth Jacobs was a teenager. If you were a prostitute, the thinking went, it was your choice.

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Are Things Too Cozy In London's 'City' Within A City?

Jul 5, 2013
Originally published on July 5, 2013 2:33 pm

For at least a millennium, the heart of Britain's commercial and financial industries has been the City of London.

The City is not the large metropolis we know as London. It's much older and smaller. Many call it the Square Mile, though it's not square and a bit bigger than a mile. It's the home to big banks, medieval alleyways and St. Paul's Cathedral. And, for all those centuries, the area has had the same local government with an unusual name: The City of London Corporation.

This little government does more than just run schools and collect what the Brits call rubbish. It's a stealth power.

"It runs its own police force, it has its own mayor, and ... most importantly, it runs its own foreign policy," says Ronen Palan, a professor at the City University London.

The City has fewer than 7,500 residents. Yet, it has 125 elected officials. Its Lord Mayor travels the world promoting business. And, it has a cash account worth roughly $2 billion.

An Unusual Democracy

And, it has a very unusual democracy. Because so few live there, and because as many as 300,000 people commute in each day, the City lets local businesses appoint workers to cast ballots. JPMorgan Chase gets votes. So does the Bank of China and the little lawyer's office down the street.

With businesses its constituents, the City then uses its cash to promote the financial industry's interests. In the view of one elected common councilor, City officials don't spend much time analyzing what's wrong with the banks.

"They're always too uncritical," says Patrick Streeter, who represents the City's Bishopsgate Ward. "They're more apologists for the U.K. financial community."

How is it that a little local government has the power to influence legislation, host world leaders and advocate for British finance around the world? A lot of it stems from its sheer longevity. From the grocers to goldsmiths, the Square Mile has been the center of British business for as long as we have records. The City bankrolled kings it liked and helped depose those it didn't.

Special Privileges

But, in recent years, it's found an unlikely adversary. Father William Taylor is a vicar in the neighboring East End.

He became intrigued as he noticed the City gets special privileges other parts of London do not — like a permanent official in parliament who sits across from the speaker and gives the City's view on legislation.

"Do doctors have a permanent professional advocate in parliament?" Taylor asks. "Do teachers? Do firemen? No, they don't. But the financial services, through the ancient constitution of the City of London, do."

Taylor has become a key part of a reform group that's been taking on the City since the financial crisis. He believes the City has promoted policies creating a network of tax havens in British territories and former colonies — a network some say has made London an attractive place for American and other foreign banks.

And, he says the City defended light financial regulations in the U.K.

"Because it's got all this private money, because it's got this access to parliament, it's able to continue to tell MPs and parliamentarians, 'Don't kill the goose that lays the golden egg,' " Taylor says.

'Efficient' Regulation Of Banks

But City officials are dismissive of this criticism.

"William Taylor is a critic of the City — yes, one person," says Mark Boleat, chairman of the policy and resources committee of the City of London Corporation and the most powerful person in its government.

Yes, the City government represents the business sector, Boleat says.

"I wouldn't say we're a lobbyist. We act as a representative body to some extent, working with trade associations and others," he says.

Boleat says it's not the City's job to criticize or regulate the big banks. It doesn't make policy.

"Are we against financial regulation? Absolutely not. What we want to see is high-class, effective, efficient regulation because without that we wouldn't have any business in the City," he says.

To him, the City's power has been greatly exaggerated by its critics and conspiracy theorists. But professor Ronen Palan isn't buying it.

"They were always excellent in playing down their power to the public," he says. "But behind the scenes, they've been very, very significant in shaping British policy."

And since it has survived plagues and fires and bombings and even globalization, don't bet against the City of London Corporation.

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