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The history of Stockholm, capital of Sweden, for many centuries coincided with the development of what is today known as Gamla stan, the Stockholm Old Town. Stockholm's raison d'être always was to be the Swedish capital and by far the largest city in the country.

The name 'Stockholm' easily splits into two distinct parts – Stock holm, "Log islet", but as no serious explanation to the name has been produced, various myths and legends have attempted to fill in the gap. According to a 17th century myth the population at the viking settlement Birka decided to found a new settlement, and to determine its location had a log bound with gold drifting in Lake Mälaren. It landed on present day Riddarholmen where today the Tower of Birger Jarl stands, a building, as a consequence, still often erroneously mentioned as the oldest building in Stockholm. The most established explanation for the name are logs driven into the strait passing north of today's old town which dendrochronological examinations in the late 1970s dated to around 1000. While no solid proofs exists, it is often assumed the Three Crown Castle, which preceded the present Stockholm Palace, originated from these wooden structures, and that the medieval city quickly expanded around it in the mid 13th century. In a wider historical context, Stockholm can be thought of as the capital of the Lake Mälaren Region, and as such can trace its origin back to at least two much older cities: Birka (c. 790–975) and Sigtuna, which still exists but dominated the region c. 1000–1240 — a capital which has simply been relocated at a number of occasions.

The name Stockholm first appears in historical records in letters written by Birger Jarl and King Valdemar dated 1252. However, the two letters give no information about the appearance of the city and events during the following decades remain diffuse. While the absence of a perpendicular city plan in medieval Stockholm seems to indicate a spontaneous growth, it is known German merchants invited by Birger Jarl played an important role in the foundation of the city. Under any circumstance, during the end of the 13th century, Stockholm quickly grew to become not only the largest city in Sweden, but also the de facto Swedish political centre and royal residence. Thus, from its foundation, Stockholm has been the largest and most important Swedish city, inseparable from and dependent on the Swedish government. However, as late as the 16th century, reigns of Kings Eric XIV and John III, whose Swedish government often travelled with them elsewhere (see below), the city was still not what could be called a national capital in modern terms. During the Kalmar Union (1397–1523), controlling Stockholm was crucial to anyone aspiring to control the kingdom, and the city was consequently repeatedly besieged by various Swedish Danish factions. In 1471, Sten Sture the Elder defeated Christian I of Denmark at the Battle of Brunkeberg only to lose the city to Hans of Denmark in 1497. Sten Sture managed to seize power again in 1501 which resulted in a Danish blockade lasting 1502–1509 and eventually a short peace. Hans' son Christian II of Denmark finally conquered it in 1520 and had many leading nobles and burghers of Stockholm beheaded in the so called Stockholm Bloodbath. When King Gustav Vasa finally besieged and conquered the city three years later, an event which ended the Kalmar Union and the Swedish Middle Ages, he noted every second building in the city was abandoned. By the end of the 15th century, the population in Stockholm can be estimated to 5,000–7,000 people, which made it a relatively small town compared to several other contemporary European cities. On the other hand, it was far larger than any other city in Sweden. Many of its inhabitants were Germans and Finns, with the former forming a political and economic elite in the city. During the Middle Ages, export was administered mostly by German merchants living by the squares Kornhamnstorg ("Grain Harbour Square") and Järntorget ("Iron Square") on the southern corner of the city. Regional peasantry supplied the city with food and raw materials, while the craftsmen in the city produced handicrafts, most of whom lived by the central square Stortorget or by the oldest two streets in Stockholm, the names of which still reflects their trade: Köpmangatan ("Merchant Street") and Skomakargatan ("Shoemaker Street") in the central part of the city. Other groups lived by the eastern or western thoroughfares, Västerlånggatan and Österlånggatan.

After Gustav Vasa's siege of Stockholm, he restored the privileges of the city which was beneficiary to the burghers of the city. The king maintained his control over the city by controlling the elections of aldermen and magistrates. By the mid century, the numbers of officials increased in order to make the management of the city more professional and to ensure the state controlled trade. Stockholm thus lost much of the independence it had had during the Middle Ages and became politically and financially bound to the state. During the reign of his sons (1561–1611), the city council remained escorted by a royal representative and both magistrates and aldermen were appointed by the king. Gustav Vasa invited the clergyman Olaus Petri (1493–1552) to become the city secretary of Stockholm. With the two side by side, the new ideas of the Protestant Reformation could be quickly implemented, and sermons in the church were held in Swedish starting in 1525 and Latin was abolished in 1530. A consequence of this development was a need for separate churches for the numerous German and Finnish speaking citizens and during the 1530 the still existent German and Finnish parishes were created. The king was, however, not favourably disposed to older chapels and churches in the city, and he ordered churches and monasteries on the ridges surrounding the city to be demolished, together with the numerous charitable institutions. Because Stockholm had a city wall, it was exempted from the tax paid by other Swedish cities. During the reign of Gustav Vasa the city's fortifications were reinforced and in the Stockholm Archipelago, Vaxholm was created to guard the inlet from the Baltic. While the medieval structure of Stockholm remained mostly unaltered during the 16th century, the city's social and economic importance grew to the extent that no king could permit the city to determine its own faith – the most important export item being bar iron and the most important destination Lübeck. During the reign of Vasa's sons, trade led many Swedes to settle in the city, but the trade and the capital needed to control it was largely in the hands of the king and German merchants from Lübeck and Danzig. Throughout the era, Sweden could hardly claim the level of government and bureaucracy requisite to a capital in the modern sense, but Stockholm was the kingdom's strongest bastion and the king's main residence. As Eric XIV's pretensions were on par with those of Renaissance princes on the continent, he afforded himself the largest court his finances could possibly support, and the royal castle was thus the biggest employer in the city.

The process of reshaping Stockholm was initiated by a major fire in 1625 which destroyed the south western part of today's old town. As a result, two new boulevard like streets were created — Stora Nygatan and Lilla Nygatan — and along the eastern waterfront the medieval wall was replaced by a row of prestigious palaces — Skeppsbron. For the ridges surrounding the city – Norrmalm, Östermalm, Kungsholmen, and Södermalm – new city plans were worked out to create wide and straight artery streets. The project was implemented so thoroughly, in several parts of the city no traces exist of the previous medieval structures. Many of the streets from this era are still extant, and some of those proposed have been realised with some minor modifications. The population grew from less than 10,000 in the early 17th century to more than 50,000 in the mid 1670s. The city's income rose from 18,595 daler in 1635–36 to 81,480 daler in 1644. In 1642, approximately 60 per cent of that sum was spent on construction works. In contrast with other Swedish cities, all of which were self supporting, Stockholm was completely dependent of the transit passing through the city—it had, for example, about the same number of domestic animals as Uppsala, which only had ten per cent the population of the capital. All goods brought into Stockholm had to pass through one of six customs stations, and approximately three fourths of them were exported from the city. Half of the remaining items, mostly fishery products, were delivered from the Baltic, and corn came from the Lake Mälaren region. However, during the latter half of the century, the rapidly growing capital could not be supported by the Lake Mälaren region alone and therefore became dependent on corn imported from the provinces. Sweden had played a passive role in international trade during the 16th century; German merchants and ships managed the export of Swedish primary products such as osmond iron, raw copper, and butter. This export was largely regarded as a means of securing the import of items not available in Sweden, such as salt, wine, and luxury goods demanded at the court. With the introduction of a mercantile doctrine around 1620, trade became a keystone to governmental income and the Swedish economy subsequently focused on export, not of raw materials, but of refined products. Over the entire period (c. 1590–1685), Stockholm's share of the national economy remained stable at around two thirds, but during the first half of the 17th century, export grew fourfold and import fivefold. Most goods were delivered to the Netherlands in the mid 17th century and to the UK in the early 18th century.

In the late 20th century, Stockholm became a modern, technologically advanced and ethnically diverse city. Throughout the century, many industries shifted away from work intensive activities into more high technology and service industry knowledge based areas. The city continued to expand and new districts were created, some with high proportions of immigrants. Meanwhile, the inner city (Norrmalm) went through a criticised as well as an admired wave of modernisation in the post war period, the Redevelopment of Norrmalm, securing the city's geographical center as the political and business center for the future. In 1923 the Stockholm municipal government moved to a new building, the Stockholm City Hall. The Stockholm International Exhibition was held in 1930. In 1967 the city of Stockholm was integrated into Stockholm County.