ORIGIN & HISTORY of COMMERCE

ORIGIN AND HISTORY OF COMMERCE 

(IN RESPECT TO INDIA AND WORLD)

Exchange of goods or services for money or in kind, usually on a scale large enough to require transportation from place to place or across city, state, or national boundaries.

Read more: http://www.businessdictionary.com/definition/commerce.html

Exchange of goods or services for money or in kind, usually on a scale large enough to require transportation from place to place or across city, state, or national boundaries.

Read more: http://www.businessdictionary.com/definition/commerce.html

Exchange of goods or services for money or in kind, usually on a scale large enough to require transportation from place to place or across city, state, or national boundaries.

Read more: http://www.businessdictionary.com/definition/commerce.html

Exchange of goods or services for money or in kind, usually on a scale large enough to require transportation from place to place or across city, state, or national boundaries.

Read more: http://www.businessdictionary.com/definition/commerce.html

Exchange of goods or services for money or in kind, usually on a scale large enough to require transportation from place to place or across city, state, or national boundaries.

Read more: http://www.businessdictionary.com/definition/commerce.html

Exchange of goods or services for money or in kind, usually on a scale large enough to require transportation from place to place or across city, state, or national boundaries.

Read more: http://www.businessdictionary.com/definition/commerce.html

Commerce has evolved over the centuries from a simple trade of goods or services for other goods or services to the complex buying, selling, and trading that occurs online every day. In fact, eCommerce greatly changed commerce, allowing people to show whenever they want and making international orders much easier. Commerce has greatly changed over the centuries, and now it's a major part of all countries. But how did today's concept of commerce come from? Let's take a look at what commerce is, its history, and what types of commerce we engage in today.

What is Commerce?

Commerce is defined  as the exchange of money for goods or services. While it's true that "commerce" can be applied to any transaction, most of the time when people think of commerce, they think of large-scale buying or selling. These transactions often require products to be transported from place to place or even from country to country. Commerce involves politics, economics, technology, culture, society, and the legal system. Another way of defining commerce is that it is the part of business that includes all institutions, functions, and activities that involve moving goods to consumers from producers.

Commerce is a part of all countries and communities. Any time one person trades something they've found or made for something else, commerce is occurring on a very small level. When done properly, commerce can help improve the standards of living for a country's citizens and improve its relations with other countries. When it's not regulated, big businesses can gain control of the market, manipulating it for their own benefit and driving smaller businesses into bankruptcy.

'Exchange of goods and services for money or in kind, on a scale large enough to require transportation from place to place or across the city or state or national boundaries.'

'Commerce is the conduct of trade among economic agents. Generally, commerce refers to the exchange of goods, services or something of value, between businesses or entities. From a broad perspective, nations are concerned with managing commerce in a way that enhances the well-being of citizens, by providing jobs and producing beneficial goods and services.'

"Commerce is an organized system for the exchange of goods between the different parts of world."

Origin Of Commerce :-

"COMMERCE is derived from the Latin word COMMERCIUM , from COM- together and MERX(merce)- MERCHANDISE."

 

The history of commerce is history of civilization. In his barbarous state man's wants are few and simple limited to his physical existence such as food clothing and shelter , but as he advances in the scale of intelligence his wants increases and he require not only comfort and conveniences but also the luxuries. Civilized man is never satisfied for no sooner is the want supplied than other arises in it's place and under that stimulus he achieves mighty conquests over the force of nature and attain to a high degree of development in character.        Commerce is one of the means by which various people have at different times have undertaken to supply their needs.

No civilized community produce all the things which it consumes. A portion of needs must be supplied by an interchange of products with other communities or nation and this is the beginning of commerce either domestic or foreign.

moreover it may be impossible for a nation to produce all that it needs to consume physical peculiarities of the country, it's lack of cotton or rice in abundance.

 

The Phoenicians.
The first navigators and carriers of goods by water, of which we read, were the Phoenicians who inhabited the narrow strip of coast land along the east of the Mediterranean Sea. Having a large sea frontage with little interior distance, these people were naturally attracted to seafaring occupations. Their coast abounded in good harbors, and their abundant forests supplied the materials for ship building, while agriculture was difficult on account of the hilly and rocky nature of the land. Here we see the natural conditions exactly reversed from those of Egypt, with the effect of developing a nation of navigators and traders instead of farmers, as in Egypt. The enterprise and activity of the Phoenicians were wonderful. They founded the cities of Tyre and Sidon and built up a large and profitable system of commerce. Intellectual activity and diligence in business led these people to many discoveries, among which were the making of glass, the art of dyeing purple and writing by means of letters. They are said to have rounded the Cape of Good Hope on voyages to India about the year B. C. 600.

History Of Commerce :-

 Commerce had it's beginning when the first humans started trading goods, but it wasn't until money was introduced that what we think of commerce really began. Global commerce as it is known today had it's beginning in the 16th century when the large trading companies were formed in UK, Spain. Portugal and The Netherlands. These empires freely traded with each other, and explorers met other civilization in ASIA and AFRICA , their trde route expended and connected to the trade routes already in place in those countries.

By 20th century expended from small shops and outdoor markets to supermarket. Sailing ships were replaced by steam ships , then by railroads and finally by planes and large cargo vessels. With these changes commerce went from slow process that could take weeks to a process that could take a several hours.

The creation of organization like WORLD TRADE ORGANIZATION  was to help control commerce and promote free trade and remove any barriers to trade.
The evolution of commerce and commercial activities can be studied under the following stages.
a. Family Economy Stage. b. Hunting and Fishing Stage
c. Pastoral Stage
d. Agricultural Stage
e. Barter Economy Stage
f. Money Economy Stage
g. Town Economy Stage
h. International Trade Stage
a. Family Economy Stage:
This was the stage of self-sufficiency. At this stage the members of a family used to divide work among them and tried to live as an independent unit. The procurement of food was meant for the consumption of entire family.
b. Hunting and Fishing Stage:
This was the stage where men spent their time in hunting and fishing for food while the women kept themselves busy in gathering fruits and distributing the food among all the family members. The food procured was only to the extent required for the family members.
c. Pastoral Stage:
At this stage the members of the family started domesticating animals for the food requirements of the family for a prolonged period. Men used to move from place to place in search of food and shelter. They used to cloth themselves with grass, leaves and animal skins.
d. Agricultural Stage:
Man developed the art of cultivation of land and started living in a fixed place. Men built houses and started cultivating land. This marked the beginning of the growth of collective living which led to the emergence of communities and villages.
The true form of commercial activities started from this stage where people started producing more than their families required and the surplus produce was exchanged which led to the Barter System. The foundation for modern commerce was laid down during this stage.
e. Barter Economy Stage:
Barter System involves exchange of goods and services for other goods and services. This marked the beginning of the true form of business activities. The barter economy laid foundation for increase in the other commercial activities like trading, division of labour, employment of slaves to get the work done etc.
The barter economy however, had its own drawbacks which led to the discontinuance of the exchange system. The drawbacks were: Absence of double co-incidence of wants: It became difficult for any one person with surplus produce to come across another person who could exchange the produce for the suitable requirement of both of them.
(i) E.g. a Barber’s service may not be required by farmer growing rice, while the Barber may need rice for his sustenance, for which he could not offer any other suitable product to the farmer in return.
(ii) Lack of common measure of value:
It was not possible to fix common values of measures for products or service to be exchanged in an equitable manner which was fair enough to both the parties concerned.
(iii)Lack of storage facilities:
The surplus production had to be stored in order to act as a source of exchange in future. This was not possible without loss in the value of the products stored, due to lack of proper storage facilities.
(Iv) Lack of sub-division:
Certain items could not be sub-divided to the required quantity to be exchanged with various other products to satisfy the variety of wants of individuals. E.g. A cow or a buffalo could not be divided by the milkman for rice, wheat and sugar required by him.
Money Economy Stage:
The drawbacks of the Barter Economy led to the emergence of the introduction of money as a common medium of exchange and settlement of transactions. At first, animal skins, furs, shells etc. were used as money and later metal was used as a medium of exchange. Still later various metals were converted into coins of definite size and weight.
Town Economy Stage:
The development of a common medium of exchange led to the increase in the trading activities. Specialized activities were carried on by groups of individuals on a locality basis. This led to the growth of towns and cities. Trade began between traders of different towns and cities.
International Trade Stage:
The traders could not only trade within the boundaries of their countries but also beyond. With the discovery of the Cape of Good Hope route by Vasco Da Gama, discovery of America, and cir-cum navigation by Magellan goods were now produced to be sold in foreign markets. Specialized institutions like banks, transport organizations, insurance agencies, and warehouses helped in the development of international as well as domestic trade.

History Of Commerce in India :-

 Commerce has been in practice since time immemorial. It is part and parcel of human life, whether it is a king or a common man. It emerged as an economic activity mainly as barter system, which means exchange of goods for goods.

In absence of medium of exchange in form of money today. The growth of civilization witnessed the rise and fall of many dynasties but still the course of commerce activities continued further and further not only within a country but also between nations of the world.

 However Tamil Nadu remained as to be the founder of trade and commerce both within and outside as evidenced in various ancient literature like SANGAM.

The earliest trading population of India was Indus Valley Civilization, who used the word 'trade'. The early Tamils produced their products and goods in their lands and bartered their surplus and that is how trade come into existence.

 The Tamil BRAHMI inscriptions from Alagar Malai Pugalur, Mangulum and Sri-Lanka illustrate the fact that trade in gold, oil , plough, cloth etc. was conducted during the early age . Trade was one of the major mean of linking various regions in the medieval period. There was dependence and interdependence among the people in matter of trade and commerce. Barter system cemented their relationship internally while coin were used later for the purpose of exchange of goods in external trade.

• Among the merchant classes, some specialized in wholesale trade, and others in the retail trade. The wholesale traders were known as ‘seth’ or ‘bohra’ and the retail traders were known as ‘beoparis’ or ‘banik.’
• In south India, the community ‘chettis’ formed the trading class. Besides, there was a special class, ‘banjaras,’ who specialized in the trading.
• The banjaras used to move from one place to another place, sometimes with thousands of oxen, laden with food grains, salt, ghee, and other daily use stuff.
• The ‘sarrafs’ (shroff) are specialized in changing money, keeping money in deposit or lending it, or transmitting it from one part of the country to the other by means of ‘hundi.’
• The ‘hundi’ was a letter of credit payable after a certain period. The use of hundis made it easier to move goods or to transmit money from one part of the country to another.
• When needed, the hundis were cashed at a discount rate, which sometimes included insurance so that the cost of goods lost or destroyed in transit could be recovered. Taking the advantage of these facilities, the Indian merchants could easily ship goods to countries of West Asia as well where there were Indian banking houses.
• English and Dutch traders who came to India during the seventeenth century found that the Indian financial system was highly developed, and the Indian merchants were very active and alert.
• The trading community of medieval time in India was considerably large in number and included some of the richest merchants of the world. For example, Virji Vohra had a large fleet of ships and he dominated Surat trade for several decades; Malaya Chetti dominated the Coromandel Coast; Abdul Ghaffoor Bohra was much popular trader who left 85 lakhs of rupees in cash and goods at the time of his death in 1718.
• Merchants and traders lived in lofty houses with colored tiles, wore fine clothes, and had people carrying flags and banners before them when they moved out in public.
• The French traveler, Bernier, however, written: “the merchants tried to look poor because they were afraid that they might be squeezed of their wealth.”
• Bernier’s observation might be wrong because the emperors right from the time of Sher Shah passed many laws to protect the property of the merchants.
• The laws made (for the traders) by Sher Shah were very strict. Secondly, Mughal Emperor Jahangir made a provision that “if anyone, whether nonbeliever or Musalman should die, his property and other belongings should be left for his heirs, and no one should interfere with them.”
• In a case where the respective (rich) person had no heir, an inspector should be appointed and also there would be separate guardians to guard the property, so that its value might be expended in a lawful and social expenditure, such as the building of mosques and sarais, repair of broken bridges, and the digging of tanks and wells.”

Organization of Trade & Commerce

• The Mughals paid attention to roads and sarais, which made communication easier. A uniform tax was levied on goods at the point of their entry into the empire. Rahdari (a transit duty, a toll) or Road ceases was declared illegal, though it continued to be collected by some of the local rajas (kings).
• The Mughals introduced silver rupees of high purity, which became a standard coin in India and abroad and that helped in the growth of India’s trade as well.
• Mughals also made the policies that helped the commercialization of the economy and the growth of a money economy.
• During the Mughals period, salaries of the standing army as well as many of the administrative personnel (excluding the nobles) were paid in cash. Besides, under the zabti system, the land revenue was assessed and required to be paid in cash.
• The growth of the rural grain markets led to the rise of small townships (or qasbas). The demand for all types of luxury goods by the nobles led to the expansion of handicraft production as well as the growth of towns.
• Ralph Fitch, who came India during the Akbar’s reign said that Agra and Fatehpur Sikri were each larger than London.
• Monserrate said that Lahore was second to none of the cities in Europe or Asia. Bernier says that Delhi was not much less than Paris and that Agra was larger than Delhi.
• Ahmadabad was also a large town, being as large as London and its suburbs. Dacca, Rajmahal, Multan, and Burhanpur were large towns, while Patna in Bihar had a population of 2 lakhs.

Role of European Trading Companies

• In the beginning of seventeenth century, the arrival of Dutch and English traders also helped in the growth of India’s trade.
• The Indian traders welcomed the foreign traders and they helped to break the Portuguese monopoly of sea trade, and in a course of time, helped to establish a direct link between India and the European markets.
• Over a period of time, like the Portuguese, the Dutch and the English traders were also intended to establish a monopoly and made fortified establishments so that they could confront the local rulers.
• The Portuguese power had begun to decline during the second half of the sixteenth century, as was demonstrated by the defeat of the Spanish Armada by England in 1588.
• Despite a vehement opposition by the Portuguese, in 1606, the Dutch established themselves at Machilipatnam after obtaining a farman from the ruler of Golconda. They also established themselves in the Spice-Islands (Java and Sumatra); likewise, by 1610, they predominated in the spice trade.
• The cloth produced on the Coromandel Coast was the most popular and also cheapest to carry. Hence, Dutch increased their trade to south from Machilipatnam to the Coromandel Coast. They made Pulicat as their base station after taking it from the local ruler.
• Like the Dutch, the English also had come to the coast for the spice trade, but the hostility of the Dutch created a hindrance.
• In 1612, after defeating a Portuguese fleet out-side Surat, the English were able to set up a factory (in Surat), for which permission finally was taken by Thomas Roe in 1618 from the Mughal Emperor Jahangir.
• The Dutch followed the English and soon established a factory at Surat as well.
• Export of textiles was the base of India’s foreign trade. As an English writer observed, “From Aden to Achin (in Malaya) from head to foot, everyone was clothed in Indian textiles.”
• In 1622, with the help of the Persian forces, the English captured Ormuz, the Portuguese base at the head of the Persian Gulf.
• By the first quarter of the seventeenth century, both the Dutch and the English were well set in the Indian trade, and the Portuguese monopoly was broken forever.
• The Portuguese restricted to Goa and Daman and Diu only; likewise, their share in India’s overseas trade declined continuously and was almost insignificant by the end of the century.
• By 1640, export of cloth from the Coromandel equated with that of Gujarat; and by 1660, it was three times that of Gujarat. Machilipatnam and Fort St. David, which later developed into Madras were the chief centers of the trade.
• Another item which became popular was the export of Saltpeter (chemical name Potassium nitrate), which supplemented the Europeans, as it was used in making gun-powder and was also used as a ballast for ships going to Europe.
• The best quality Saltpeter was found in Bihar; therefore, exports from these areas grew rapidly; surprisingly, by the end of the century, this trade became equal (in value) to the exports from the Coromandel.
• The Indian textiles became a rage in England by the last quarter of the seventeenth century. An English observer wrote, “Almost everything that used to be made of wool or silk, relating either to dress of the women or the furniture of our houses was supplied by the Indian trade.”
• The increasing import from India, put down the local European market; as a result of which, in 1701, an agitation had been seen in Europe. Subsequently, all calicoes painted, dyed, printed, or stained from Persia, China, or the East Indies (i.e. India) were banned. But the agitation and subsequent strict laws could not change the trade pattern effectively.
• India was more closely linked to the world markets, especially to the European markets where a commercial revolution was taking place. But this linkage had negative factors as well. Europe had little to supply to India in return for its goods.