Over the following decades, their business in Iceland expanded. After 1880, free trade was expanded to all nationalities and the influence of Icelandic merchants started to grow.
Rise of nationalism
Icelandic nationalist sentiment gained influence in the 19th century and ideas of Icelandic independence became widespread. Reykjavík, as Iceland's only city, was the melting pot of such ideas. Advocates of an independent Iceland realized that a strong Reykjavík was fundamental to that objective. All the important years in the history of the independence struggle are important for Reykjavík as well. In 1845, Alþingi, or the general assembly that Icelanders formed in 930, was re-established in Reykjavík; it had been suspended a few decades earlier when it was located at Thingvellir. At the time it only functioned as an advisory assembly with the function of advising the King about Icelandic affairs. The location of Alþingi in Reykjavík effectively established the city as the capital of Iceland.
In 1874 Iceland was given a constitution and with it, Alþingi gained some limited legislative powers and in essence became the institution that it is today. The next step was to move most of the executive power to Iceland and that was done by Home Rule in 1904 when the office of minister for Iceland was established in Reykjavík. The biggest step towards an independent Iceland was taken December 1, 1918 when Iceland became a sovereign country under the Crown of Denmark, the Kingdom of Iceland.
In the 1920s and 1930s most of the growing Icelandic fishing trawler fleet sailed from Reykjavík and salt-cod production was the main industry but the Great Depression hit Reykjavík hard with unemployment and labor union struggles that sometimes became violent.
World War II
In the morning of May 10, 1940,
