The area around Reykjavík was considered suitable to be presented for the kings men, even back in the middle ages. That was probably because there were good fishing grounds in Reykjavík and good harbour conditions in the surrounding areas. Foreign business men were therefore willing to dock their ships here which contributed to Reykjavík becoming the place to be.
In the middle of the 18th century it was decided that the sheriff, the Danish king´s financial minister, should be based in Viðey, an island just outside of Reykjavík. Mr. Magnússon, Skúli Magnússon, was the sheriff at that time and mainly he is to thank for restoring the economy in Iceland with his company. The company, Innréttingarnar, mostly made clothes from wool.
The sheriff, Mr. Magnússon, got support from the Danish king and Magnússon´s company got a land called Reykjavík and Örfirisey. In those days Reykjavík and Örfirisey belonged to the king. Reykjavík was in those days “just” a farm and it is thought that Mr. Magnússon chose these places for his company as they were close to where he lived, in Viðey. Also, good harbour conditions in Reykjavík, good conditions for land transport, plenty of water and enough fuel – most likely turf were also reasons for Mr. Magnússon´s choise of location.
What happens right before the year 1800 is that the bishop´s office and the latin school of Skálholt in south Iceland move to Reykjavík due to massive earthquakes that occurred in south Iceland. The Sheriff´s Embassy was already in Reykjavík, the Governor´s Office moved to Reykjavík, the Director General of public health and The Pharmacy moved to Reykjavík, the Parliament was re-established in Reykjavík, and so on and so forth.
This development is a strong foundation for Reykjavík becoming the most densely populated area in Iceland and later the capital of Iceland. Along with all these institutions houses needed to be built for the owners and all the employees. Gradually markets grew, trade increased and restaurants were established.
Reykjavík was at that time more like a country village than a fishing village. Mostly due to the diverse culture that thrived from foreign trade.
One way of looking at cities is looking at them like living creatures, who grow and develop according to the conditions given at the time. We should therefore listen to and cherish the ones who fight against outdated ideas and ideology – the pioneers and the visionaries – like the sheriff Mr. Magnússon.
The reason why Reykjavík became the first and by far the biggest town of Iceland is due to good natural conditions. But also because of the visionaries and pioneers who moved to Reykjavík. What happens is that these people, the visionaries and pioneers, fascinate likeminded and powerful people within the administration who then also move to Reykjavík.
We know that if you want to be someone you need to be somewhere. So, being based in the country side while everything was happening in Reykjavík was not feasible.