In order that commerce may be carried on at all advantageously, there must be a con siderable degree of mutual confidence be tween traders. Goods cannot be brought to a market to be exposed for sale unless there is a somewhat stable social condition. Tribes that are at war, or are in constant fear of treachery, cannot conveniently exchange their products, and the gradual development of com merce is closely connected with the develop ment of credit. A low degree of credit is presupposed in barter, more is needed in a system of representative money, and its com plete supremacy is required when commerce has extended to distant lands, and goods are sent great distances without the personal escort of their owners.
The introduction of improved methods of transportation is one of the most powerful agencies in the development of commerce in its modern form. Goods cannot be exchanged on any large scale while they must be carried by human beings, or by beasts of burden, for the reason that their value does not justify the expense. Water transportation is cheaper, and accordingly the first commerce of any magni tude is between the different ports of inland seas, where the dangers of navigation are com paratively slight, and its economy sufficient to permit exchanges. Canals bring the benefits of water transportation to interior regions, and a combination of water route with a short land route over which goods are carried in caravans, finally unites places that are remote in distance. But until very recent times the contact was only occasional, and had but little effect upon the general welfare of the inhabitants of the regions thus brought into relation. In Europe, throughout the Middle Ages, exchanges were ordinarily confined to the different trades, or guilds, of a single locality. The new demand for foreign luxuries is the most marked charac teristic of the revolution of industry and com merce at the beginning of the sixteenth century.
Throughout the next three hundred years commerce steadily advanced in importance as a feature of the economic life of Europe and America, and within the present century it has become far more important than ever before. The application of steam to ocean and river nav igation and to the steam railway have worked a commercial revolution in the second half of the century. At the beginning of the century, the growth of the factory system, with its con sequent extension of the principle of division of labor, had accomplished what is known as the industrial revolution ; but it had also its effect upon the development of commerce. It in
creased the number of the cheaply manufactured goods, which, if we consider only the needs of the communities that make them, are superflu ous and of little utility, but which, in a country with extensive commercial relations, are really or partly finished commodities, since they are made not for themselves, but for the sake of the goods which they will bring in exchange.
The later revolution exhibits the development of a network of railways and steamship lines binding together all parts of the world, bringing Europe and America within a week of each other, and making it possible for each city to obtain from a distance, not merely spices and such few other goods as have great value com pressed into a small bulk, but even its food supplies, the materials used in the erection of its houses, and the materials from which it manufactures its clothes. The extent of the revolution effected by the new methods of transportation is illustrated by the fact that a bushel of wheat may be shipped from Minne apolis to London, only a very small part of its value being used up in the expense of trans portation, but that wheat cannot be hauled to Minneapolis by wagon from a village twenty miles distant because of the expense.
There is one very important feature of the organization of commerce of which we have not yet given an account, although in order of development it belongs earlier than the more striking features of the improvement in trans portation facilities. Reference has been made to the possible difficulty of the early producer in finding purchasers for his product, who are supplied with the commodities that he desires. This difficulty is met by the use of some one commodity which all agree to accept as a me dium of exchange. With this difficulty out of the way, the producer may next encounter one which is more fundamental. He may not suc ceed in finding a purchaser at all. And yet purchasers may be quite as anxious to find the supply, as the producer is that they should. Coincidence of buyers and sellers is not so difficult as the double coincidence requisite in barter, but it may still be so difficult that a disproportionate amount of time is necessarily spent in marketing products.