The correct answer is C.
Secularism is the principle of separation religion from the states. It means that the government should remain neutral on religious matters and should not enforce any type of religion at all. The government should be religion-free and act on moral grounds only, not according to it's religious practices or beliefs.
The merchant goes to church every week to practise his religion, he does not want, however, any religious influence on his business or the government in his city. He considers religion a private issue and he advocates secularism, meaning that all city officials' decisions should never be influenced by their religious beliefs. He wants his business to be neutral and not under the church's influence, he does not want the church to tell him what to and what not to do in his business.