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The man behind The Royal Exchange

Extracts from the book Gresham’s Law by John Guy explore the ambition and influence of The Royal Exchange’s founding father

A portrait of The Royal Exchange founder Sir Thomas Gresham (1519 - 1579), by Anthonis Mor

The Royal Exchange marks 450 years at the heart of City of London life this year. This impressive milestone is testament to the significant role it has played in the development and evolution of the city that has grown around it. But who was the man behind this heritage building, and how did he secure a Royal endorsement for his grand initiative?

The answer to that question is revealed historian and biographer John Guy’s book Gresham’s Law: The Life and World of Queen Elizabeth I’s Banker, which was commissioned by the Corporation of London and the Mercers’ Company to mark the 500th anniversary of Sir Thomas Gresham’s birthday in 2019. The book provides insights into Gresham’s career, charting his rise to a position of prominence and influence in Elizabethan England, and his lasting legacy with the monumental creation of The Royal Exchange.

The below extract, from the book’s introduction, provides a succinct summary of Gresham’s credentials and status, painting a picture of an ambitious, adaptable and well-connected personality, who saw opportunities arising as the world recovered from the Black Death.

In 1519, a third Thomas was born. Thomas Gresham, the son of a wealthy merchant-banker friend of both [Thomas] More and [Thomas] Cromwell, was another revolutionary man, if in an entirely different sphere. He cut his teeth smuggling bullion for Henry during the 1540s, before becoming government banker to three Tudor monarchs, notably Elizabeth I, whom he successfully served for some twenty years. Endowed with an uncanny mastery of the intricacies of foreign exchange dealing and of self-preservation in a period of rapid regime change, he made a near-seamless transition from Edward VI’s Protestant to Mary I’s Catholic, and back to Elizabeth’s Protestant regime. A man with an exalted sense of his own worth, he could be devious, perceptive and capable of a rare impertinence when teaching rulers the basic principles of economics. His originality lay mainly in his unswerving commitment to the new market ethos that emerged during the later Renaissance era, as the sharp recovery of population all over Europe after the ravages of the Black Death stimulated a new desire for wealth.

Gresham’s father, Sir Richard Gresham, was a City merchant mercer and Lord Mayor of London, whose knighthood was bestowed by King Henry VIII, in acknowledgement of his aptitude for negotiating favourable loans with foreign merchants. He educated his son at St Paul’s School and Cambridge University, and arranged for him to apprentice with his uncle at the Worshipful Company of Mercers, where Thomas became a merchant liveryman. It’s fair to say that Gresham was indoctrinated into the City scene of trade, finance and networking from a very early age, as the following extract attests:

From an early age, Thomas showed unusual gifts as a linguist. Educated at Cambridge before being apprenticed to his uncle, Sir John Gresham, he climbed up the ladder in the Mercers’ Company, establishing himself by his mid-thirties as a force to be reckoned with. 

An illustration of the trade exchange in 16th century Antwerp, Belgium, which inspired Gresham to create The Royal Exchange An illustration of the trade exchange in 16th century Antwerp, Belgium, which inspired Gresham to create The Royal Exchange

In 1543, at age 24, Gresham had relocated to the Low Countries, working as a merchant, and an agent for King Henry VIII. He made a name for himself as an astute and unrivalled trader, travelling back and forth between London and his headquarters at Antwerp in Belgium. It was during this period of time that Gresham’s role evolved into that of official government banker, when the English government – under King Edward VI – sought his counsel on how to fix the falling value of the pound Sterling. He raised its value on the Antwerp Bourse, which resulted in a phenomenal recovery and, in doing so, Gresham established himself as a key financial agent of the crown for decades to come; a stature that brought him considerable agent and influence:

As his remarkable career unfolded, Gresham came to understand better than any of his contemporaries how bankers and money markets could hold monarchs to ransom. The reverse had applied during the Hundred Years War (1337–1453) and Wars of the Roses (1455–1485), when rulers imposed extraordinary taxes and levies on merchandise, notably wool and wine, to pay for armies and shipping. Wool merchants bore the brunt of it: during the first half of the fifteenth century, loans were frequently demanded from them, to be repaid from customs receipts or direct taxation and not on favourable terms.

A century later, the costs of warfare had escalated: innovations in weapons manufacture, and the design of fortifications and shipbuilding, combined with the need to recruit large armies of foreign mercenaries to make war an expensive business. In this fast-evolving milieu, Gresham realised how vulnerable credit-hungry sovereign rulers were to market fluctuations. His insights would turn out to be more applicable to relatively small nation-states like post-Reformation England than to the Habsburg empire or Catholic Spain, with their far greater fiscal resources. But by fearlessly informing successive Tudor monarchs and their leading councillors of these new facts of life, Gresham made himself the first high priest of market economics.

For a significant portion of his career, Gresham worked closely with the leading advisers of Queen Elizabeth I, and played an influential role in shaping the evolution of London’s financial systems:

For the next two decades, Gresham worked hand-in-glove with Elizabeth’s leading advisers, chiefly Cecil and later the queen’s favourite, Lord Robert Dudley. In these dangerous years, the politics of Europe were transformed by the death of the Holy Roman Emperor, Charles V, and by the onset of bloody religious wars in France and the Spanish Netherlands. When Philip II introduced the Inquisition into the Netherlands, Antwerp descended into chaos and the threat to England’s independence from Spain’s global empire morphed into cold war. To meet this challenge, Thomas encouraged Elizabeth to borrow from merchants and wealthy individuals in the city of London rather than abroad, so as to reduce, then almost eliminate, her dependence on overseas credit.

Firmly established at the epicentre of Britain’s trading market, Gresham’s attention turned to demonstrating his capabilities in a more tangible form, and he focused his ambitions on creating a trading exchange similar to the one he had frequented in Antwerp, and that would bear his name and legacy for centuries to come:

Desired by a generation of city merchants, The Royal Exchange was London’s very own bourse, modelled on Antwerp’s in its heyday: a magnificent edifice designed by a Flemish architect and largely built by Flemish workmen.

To pull off the Royal Exchange, Gresham offered to pay all the construction costs of the new premises if the Corporation of London would purchase and clear a prime site near the junction of Cornhill and Threadneedle Street, more or less directly opposite what is now the Bank of England.

This illustration from c1660 depicts the two additional floors Gresham added to his original design for The Royal Exchange. This illustration from c1660 depicts the two additional floors Gresham added to his original design for The Royal Exchange.

While constructing a building that would provide a centre, and shelter, for the city’s thriving trade merchants certainly made sense from a practical and financial perspective, Guy’s chapter – dedicated to The Royal Exchange – gives a rare insight into the more personal reasons behind Gresham’s desire to create such a monumental building at the heart of the City:

As they approached their mid-forties, Renaissance rulers began to plan their legacy, and so did merchant princes. One of the many things Thomas Gresham would have discovered during his encounters abroad, if he had not already learned it at home, was that only those who commissioned some seriously good paintings or architecture during their lifetimes could be considered truly memorable. He might well have remembered from his studies at Gonville Hall [Cambridge University] the debate in classical literature about how to perpetuate one’s fame. The question was, ‘Which assures immortality more enduringly, a painting or a monument in stone?’ Like Henry VIII when he had commissioned Hans Holbein the Younger to work on a large dynastic mural and associated panel paintings at Whitehall Palace, Gresham decided he would maximise his chances and have both.

The Royal Exchange was constructed for business reasons, but its elaborate style also adequately represents the significance and legacy of Gresham’s achievements in turning London into a world-leading financial trading hub:

From the evidence of Gresham’s ground plan, it seems that he meant to replicate the main design features of the New Bourse at Antwerp, notably its spacious courtyard and upper storey complete with retail space for the sale of luxury goods, but in a more conspicuously classical style. To pull this off, he recruited the noted Hendryk van Paesschen of Antwerp as his master mason. Van Paesschen had been to Italy and his earliest works may have been some of the triumphal arches erected in Brussels and Antwerp in 1549. He was very familiar with the main public buildings in Antwerp, not least from having overseen construction work on the recently completed stadhuis there. Already it was clear that Gresham was planning a building of an architectural grandeur that would be unrivalled anywhere in London.

As to the first-floor open space that would shortly become England’s earliest shopping mall, this was described by a German visitor in 1602 as ‘a fine broad vaulted gallery, where may be bought almost everything a man may imagine by way of costly wares’. Completely given over to retail outlets each approximately 7½ feet long and 5 feet wide, the Flemish inspired design brought a cosmopolitan feel and offered a unique shopping experience to Londoners.

The junction of Cornhill and Lombard Street with the tower of The Royal Exchange behind; Elizabeth I on her way to open The Royal Exchange in 1571 The junction of Cornhill and Lombard Street with the tower of The Royal Exchange behind; Elizabeth I on her way to open The Royal Exchange in 1571

And its Royal naming? Evidently, Gresham had all the connections to secure this patronage, however attracting Queen Elizabeth I to the City was an accomplishment in itself:

On the morning of 23 January 1571, the queen left Somerset House in the Strand where she had spent the night, attended ‘with a great company and solemnity’, and rode in her coach along Fleet Street, past St Paul’s and into Cheapside. There, she would be greeted with loud cheers and great rejoicing by the citizens, ‘since she had not entered the precincts of the city for two whole years on account of the plague’.

From Cheapside, she progressed past the Stocks Market into Threadneedle Street, past the north side of the new Exchange, and on to Gresham House in Bishopsgate where Gresham and Anne Ferneley feasted her. She returned via Cornhill, so that she could enter the Exchange by its main entrance on the south side. After mounting the steps into the courtyard, she viewed ‘every part thereof above the ground, especially the pawn [i.e., first-floor gallery], which was richly furnished with all sorts of the finest wares in the city’.

A few hours later, once her curiosity was fully satisfied, she summoned a herald and a trumpeter, and – closely watched by the French ambassador and his guests – Gresham’s bourse was ‘proclaimed the Royal Exchange, and so to be called from henceforth, and not otherwise’.

And so, The Royal Exchange was born. A monument of the City of London, representing its significant status as a centre for international trade and finance, and a lasting legacy to the ambition, influence and achievements of Sir Thomas Gresham.

Gresham’s Law: The Life and World of Queen Elizabeth I’s Banker by John Guy is published by Profile Books and available from all good bookshops.

John Guy is a Fellow of Clare College, University of Cambridge, and also teaches on the Yale in London programme at the Paul Mellon Centre for Studies in British Art. He has held academic positions in Britain and the United States throughout his career, specializing mainly in the Tudor period. He is recognised as one of Britain’s most exciting historical biographers, has written several bestselling books, and is a regular presenter of both TV and Radio programs for the BBC.

Officially opened by HRH Queen Elizabeth I in 1571, The Royal Exchange celebrates its 450th anniversary this year. Visit our heritage page to learn more about the history of The Royal Exchange and keep an eye on our Journal and Instagram for more fascinating facts and insights about The Royal Exchange’s past and present