HISTORY OF TRADE & COMMERCE

 HISTORY OF TRADE & COMMERCE

Watch the full explanation here:

https://youtu.be/5QHkvTES2iQ

NOTES

How Trade & Commerce Started :

1. People consumed what they produce, there was no surplus to be exchanged.

2. With the increase in population, and advanced civilization, Barter economy started which means exchange of goods & services with goods & services as it was not possible to produce everything for personal consumption.

3. It was not possible to calculate the value of products, so coins and paper notes to remove the defects of barter economy with the expansion of trade.

4. Gradually, there was increase in production and sale of goods and services, various market places were set up for trading, transportation was improved, hence, trade and commerce evolve.

How Trading activities were conducted in India :

India is surrounded by Himalayas in North and with Sea and ocean in South. There were mainly two routes :

1. Silk Route

2. Maritime Route

Silk Route : It was connecting East to West, mainly to trade silk and textile. It helped in establishing trade and commercial connection with adjoining foreign kingdoms and empires of Asia like East Asia, South East Asia, Persian, Arabian Peninsula, East Africa and Southern Europe.

Maritime Route: This route was connecting east to west through Sea and was popularly known as 'Spice Route'. It was used to trade the spices. There were mainly two popular coasts : Malabar Coast and Coromandel Coast.

In 3rd millennium B.C. Commercial Cities like HARAPPA and MOHENJO-DARO were formed (IndusValley Civilization) . 

They established trade connections with MESOPOTAMIA.

Traded in Gold, Silver, Copper, Coloured Gemstones, Beads, Pearls, Sea-Shells, Terracotta pots.

Different types of coins and weights were used for measuring which varies from place to place and at some places commonly accepted weights and measures were used.

INDIGENOUS BANKING SYSTEM

Banking : Lending and depositing money.

Indigenous bankers are private firms or individuals who operate as banks and as such both receive deposits and give loans. Like banks, they are also financial intermediaries. 

Indigenous bankers provided finance and remittance facilities to traders and small industrialists by advancing loans; writing, buying and selling hundis; financing domestic and foreign trade. Thus they help not only in financing internal trade but also in expanding it.

Metallic money was introduced because of its durability and divisibility. With the development of banking, people began to deposit precious metals with lending individuals functioning as bankers or Seths and money became an important instrument.

MEANING OF HUNDI / CHITTHI

It is a financial instrument through which trade and credit transactions used to take place. It served as an instrument of exchange. 

It was used as a credit instrument to transfer money from one place to another or to borrow money in a credit transactions.

It involved a contract which :

1. WARRANT THE PAYMENT OF MONEY, THE PROMISE OR ORDER WHICH IS UNCONDITIONAL 

For Example : Ram bought goods from Shyam for Rs. 5000 on credit. So, Ram signed a Hundi stating that after 30 days, he will pay Rs.5000 to Shyam.

 

2. CAPABLE OF CHANGE THROUGH TRANSFER BY VALID NEGOTIATION. 

For Example : Suresh has to make payment of Rs. 5000 to Ram, So Ram will transfer his    Hundi to Suresh and Suresh will do the payment after 30 days to Shyam on behalf of Ram. 

Hundi is classified into two parts:

1. Darshani Hundi

2. Muddati Hundi

1. Darshani Hundi : Hundi which is payable at sight is known ass Darshani Hundi. When the bearer presents the Hundi, he gets the immediate payment. There is no specified time period mentioned in Hundi.

For Eg. : On demand, pay to Mr. Shyam or order, the sum of Rs.5000 for value received.

Darshani Hundi is of four types:

• DHANI-JOG HUNDI : It is payable to any person - no liability over the one who received the payment.
• SAH-JOG HUNDI : It is payable to a specific person, someone respectable. Shahs used to provide credit also. Liability over who received the payment.
• FIRMAN JOG : Firman means 'an order'. This Hundi is payable to order. For e.g Rs. 5000 is payable to 'XYZ'.
• DEKHAN HAR : Payable to the presenter or bearer, who presents the Hundi for payment.2.

2. MUDDATI HUNDI : PAYMENT IS DONE IN A SPECIFIED TIME PERIOD. FOR E.G. Three months after date pay Mr. Shyam or my order, the sum of Rs.5000 for value received.

• DHANI JOG : Payable to any person - no liability over the one who received the payment, but payment over a fixed term.
• FIRMAN JOG : Hundi made payable to order, following a fixed term.
• JOKHMI: Drawn against dispatched goods. If goods lost in transit, the drawer or holder bears the coasts and the drawee (bank or payee) carries no liability. for. e.g. A dispatched goods to B from Delhi to Mumbai and they lost in transit, so B is not liable to give any payment to A.

Agriculture and domestication of animals were important components of the economic life. Due to favorable climatic conditions, people were able to raise 2-3 crops in a year. In addition to this, cotton weaving, dyeing fabrics, making clay pots, utensils and handicrafts, sculpting, cottage industries, masonry, manufacturing transports (carts, boats and ships), they were able to generate surplus and savings for further investment.

RISE OF INTEMEDIARIES 

Intermediaries act as middlemen between different members of the distribution chain, buying from one party and selling to another.

Commission agents, brokers, distributors were formed for wholesale and retail trade. They also provided financial security to the manufacturers for the risks involved in trade.

Jagat Seths (Bankers) were developed during Mughal period who used to finance the foreign trade but on a very high rate of interest.

Exports were more than Imports, more surplus was generated hence additional capital was generated for expansion and development. 

Credit transactions and availability of loans enhanced commercial operations.

Later, Commercial, industrial and agricultural banks were developed to finance trade, commerce and agriculture sector.

TRANSPORT

Trade was maintained by land and water.

Northern roadway route was stretched from Bengal to Taxila and in the south from East to West.

Maritime Trade was done mainly through two sea coasts : Malabar and Coromandel Coast.

Black Pepper, mainly known as Black Gold was traded from Malabar Coast (Muziris )during Roman Empire.

Rivalry between two kingdoms to dominate the trade routes led to the discovery of America by Columbus in 15th Century and Vasco Da Gama reached Malabar Coast in 1493.

Chinese used to come Calicut to acquire items like essential oils, fragrant resins from middle east and pepper, diamonds, pearls, cotton from India

Coromandel Coast, Pullicat was the major port in 17th century for exporting textiles to South East Asia.

TRADING CORPORATIONS STRENGTHENED

In different parts of the country, different communities dominated trade:

NORTH – PUNJABIS AND MULTANI MERCHANTS

GUJARAT & RAJASTHAN – BHATS

WEST – MAHAJAN (NAGAR SETHS)

URBAN CENTERS, SUCH AS AHEMEDABAD – MAHAJANS 

OTHER URBAN GROUPS COMPRISED OF OTHER PROFESSIONAL CLASSES – Hakim & waids (Physician), Wakil (Advocates), Pundit or Mulla (Teachers), painters, musicians, calligraphers.

MERCHANT CORPORATIONS

Merchants formed ‘GUILDS’ – Guilds are associations which have same job, interests or aims. 

Associations of skilled workers were formed.

They form their own professional code of conducts and membership rules to protect the interests of traders. 

Trade and Industry taxes were also a major source of revenue.

OCTROI DUTY on imported articles.

CUSTOM DUTIES depends on the value of commodities, and tariffs varied from province to province. 

FERRY TAX on passengers, good, cattle and carts.

LABOUR TAX 

Association chiefs dealt directly with kings or tax collectors on behalf of other merchants at a fixed sum of money.

The members also acted as custodians of donations that were granted for religious interests.

The members also used to contribute in building temples by donating in form of corporate tax.

MAJOR TRADE CENTRES

1. PATTALIPUTRA –  Now known as PATNA. Major exporter of stones.

2.PESHAWAR – Exporting Centre for wool and Importing horses. It had a huge share in commercial transactions between India, China and Rome in the first century A.D

3.TAXILA – City of financial and commercial banks. it served as a major land route between India and Central Asia. It was a Buddhist centre of learning. The famous Taxila University flourished here.

4.INDRAPRASTHA – Commercial junction on royal road, where most routes leading to east, west, south, north meets.

5.MATHURA – People here were involved in major commerce and trade activities. Many trade routes of South touched Mathura.

6. MITHILA – From here, traders used to go to the South China Sea from Bay of Bengal, and traded on the ports of Java, Sumatra and Borneo. Mithila established trading colonies in SOuth China, especially in Yunnan.

7. UJJAIN – Agate, Carnelian, Muslin and mallow clothes were exported from here. Also had trade relations with Taxila and Peshawar.

8.SURAT – Textiles of Surat were famous for their ZARI BORDERS. It was an emporium of western trade during Mughal period. Surat Hundi was honoured in the markets of Egypt and Iran.

9.KANCHI – Now known as Kanchipuram. Chinese used to came here and purchase pearls, and rare stones and for selling gold and silk.

10. MADURA – Capital of Pandayas who controlled the pearl fisheries of Gulf of Mannar. Attraction for foreign merchants, specially Romans.

11. BROACH – Now known as Baruch, was again an ancient port city situated on the banks of Narmada river and it was linked with all important markets by roadways. It was the greatest seat of commerce in western India.

12. VARANASI – Centre for Textile Industry. Famous for beautiful Gold silk cloth and sandalwood workmanship. Had links with Taxila and Baruch.

13.KAVERIPATTA – Now known as Kaveripatanam, was a centre of trade for perfumes, cosmetics, scents, silk, wool, cotton, corals, pearls, gold, precious stones and was centre of ship building. Foreign traders had their headquarters in this city. A convenient place to trade with Malaysia, China, Indonesia and the far east.

14.TAMRALIPATI – Greatest port connected with both Sea and Land with the west and far east. It was linked by road to Banaras and Taxila. It was the Ancient Copper Port. 

POSITION OF INDIAN SUBCONTINENT IN WORLD ECONOMY (1ST A.D UPTO 1991)

1AD TO 7TH Century C.E – Largest economy of the ancient and medieval world. Country was known as ‘SWARNBHOOMI’ or ‘SWARNDEEP’.

PRE-COLONIAL PERIOD – Economy was flourishing but still it was behind Western Europe in technology, innovation and ideas. East Indian Company dominated and controlled the trading activities which led to less freedom, no occurrence of scientific revolution, limited reach of education to common masses, population growth, preference of machines over manual skills which made India a prosperous country with poor people.

BRITISH EMPIRE – 18TH CENTURY : East India company purchased raw materials, gold and spices from the revenues generated by the provinces under its rule. Hence the gold which used to come from foreign trade almost stopped. First we used to export the finished goods, but after all this India became the exporter of raw materials and the importer of finished goods.

AFTER INDEPENDENCE – First Five Year Plan was implemented in 1952 to rebuild the economy, which was focused on establishing modern industries, modern technological and scientific institutes, space and nuclear programmes. But there were certain drawbacks and limitations of Centralised Planning. 

LIMITATIONS OF CENTRALISED PLANNING- Increase in population, lack of capital formation, huge expenditure on defense and inadequate infrastructures, high amount of loans and borrowing from foreign sources could not led Indian economy develop at a rapid pace.

LIBERALISATION IN 1991- Liberalization is the process of elimination of the control of the state over economic activities. It provides greater autonomy to the business enterprises in decision-making and eliminates government interference. It has opened up the Indian economy to foreign investors. India's private sector can engage in core industries, which were previously limited to the public sector. Export and import have become simpler through reforms in foreign direct investment. It increased employment opportunities.

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