International Trade(modern commerce)

The next stage in the development of commerce was large scale extension in the geographical coverage of trade. Goods were now produced for being sold in various foreign markets, too, besides the home markets. This revolutionary change in the character and scope of trade was brought about by the Industrial Revolution which increased the scale of production immensely. Several middle-men began to operate between the producer and the consumer. The pattern of commerce grew in complexity. Specialized institutions like banks. Transport companies, insurance companies, warehousing, companies were set up to help the traders. And with it modern commerce was named. Modern commerce, in its highly developed form, consists of a complex and well developed system of exchange and a well-organized system of exchange and a well-organized system of transport, insurance, were housing and other allied activities which facilitate trade. This system is the out6come of gradual evolution spread over a long period of human history. The following stages in this long process of development may be marked.
This is how commerce and business started to develop and came into action.

The rise of trade with Town economy

At this stage, newer commodities appeared, and progressive people often came into touch with relatively backward people. Needs of people got multiplied and the need for exchange arose. In the beginning, trade took the form of direct exchange. Goods were delivered at a particular fixed place in exchange for other goods. The functions of trade were gen really exercised by princes, nobles, priests, high officials, land owners, etc. in the beginning. Gradually, the trader appeared on the scene.
At this stage, trade assumed certain fixed forms. Production began to be undertaken for catering to th needs of fixed markets. These markets gradually developed into large towns. Division of labor became increasingly important. Traders were divided into wholesale and retail merchants. For the first time, prices began to be fixed regularly, and credit began to be allowed. To regulate commercial intercourse with foreign merchants who were often mistrusted, merchant guilds, which were public and semi public institutions, were organized in towns.
After this only international trade came into action.

Household and barter system

This was the very first stage of economic development. Division of labor was almost unknown except at the family level and the men folk tried to meet the few primitive needs of their families with the help of their women. Self-sufficiency within the family was the basis of the economy and commercial intercourse between families was almost totally absent.
Gradually, the needs of  family became more numerous. Moreover, the families began to maintain slaves. At this stage, the need for exchange between different districts become imperative. Division of labor was almost unknown except at the family level and the men folk tried to meet the few primitive needs of their families with the help of their women.Commerce made its beginning and barter exchange of goods for goods began to be practiced. But even at this stage, exchange was rather rare and restricted. Means of communication were either totally absent or wholly primitive and trade was non-existent.
With this commerce rapidly started to develop.

Development of Commerce

Commerce is that aspect of business activity which is concerned with the distribution of goods and services produced by industry.Modern commerce, in its highly developed form, consists of a complex and well developed system of exchange and a well-organized system of exchange and a well-organized system of transport, insurance, were housing and other allied activities which facilitate trade. This system is the out come of gradual evolution spread over a long period of human history. The following stages in this long process of development may be marked.To regulate commercial intercourse with foreign merchants who were often mistrusted, merchant guilds, which were public and semi public institutions, were organized in towns. The pattern of commerce grew in complexity. Specialized institutions like banks. Transport companies, insurance companies, warehousing, companies were set up to help the traders.
And with it commerce started to develop.

Guilds system

Artisans working and living in a local area joined themselves into an association in order to protect and develop their business interests and commercial relations. Craft guilds, as they were called, were organized following the example of the merchant guilds which were associations of merchants. The merchant guilds tried to establish and enforce fair trading at customary prices, and regulate the conduct of the members. Similarly the craft guilds were associations of skilled work-men formed with the object of maintaining high standards of production an securing reputation for fair dealings.
The men of every craft had to appoint officials to inspect the products of the workshops. This ultimately led to the setting up of a complete system of industrial regulation. Gradually, crafts-men like those concerned with the manufacture of clothing, say, weavers, tailors, etc and leather workers, formed themselves into associations which came to be called craft guilds. The membership of these guilds became compulsory for it was found i possible to compel them to be responsible for the honesty and skill of those out-side it.
But this system was not appropriate so did not last long.

Handicraft System

Under the handicraft system the processes of production were extremely simple. Machinery was not used much. The artisans worked mostly with simple, crude and inexpensive tools. Most of the work was done by hand. Hence, industry did require much capital. Production was labor intensive. A worker who started manufacturing a product carried it through all stages. The design of the product and its finish depended entirely on the handiwork of he artisan. The organization of industry was elementary. The family of the artisan was the unit of organization Since production was carried on chiefly for a small local market, the division of labor was of a very simple type, and was introduced on a small scale. The modern means of transport were not available for the conveyance of raw materials from distant places and the transportation of the finished products to the remote markets. The artisan was, therefore, compelled together the supplies of raw materials from the neighbored and sell his products in his own locality.
Thus, artisans living in villages produced the requirements of th local people, and generally worked on th basis of yearly payments in exchange of goods supplied to meet requirements of farmers.

Domestic System

For this purpose, they began to enter into contacts with artisans and workers for the supply of goods. At first, the worker arranged for his own supply of raw materials, tools and place of work. The merchant would come, at fixed intervals, get the manufactured goods and pay. With the great rise in demand for goods, it was no longer possible for the artisan to arrange for supply of raw materials: therefore this task had to be taken up by the merchants. The merchants bought raw materials put them out to workers at their house, and then found a market for the finished products. In this sense, it could will be called the ' Putting-out System'. The artisans still worked in their homes. In the 18 century, there were several new mechnical inventions followed by a great improvement in tools. Some of the tools were beyond the means of the workers and the merchants had to arrange for supply also. Soon a merchant would be getting wok from a number of artisans. It became necessary in due course that the should collect all these workers under one roof and supervise them personally or through his agents. These places of work came to be known as manufactories.  The worker depended upon the employer for supply of materials and tools, but he still worked with his own skill which was his valuable possession. He still had the opportunity of setting up his independent production unit.
With this industry rapidly started to develop.