Trade Value

Trade involves the transfer of goods and services from one person or entity to another, often in exchange for money. Economists refer to a system or network that allows trade as a market.

Traders generally negotiate through a medium of credit or exchange, such as money. Though some economists characterize barter (i.e. trading things without the use of money) as an early form of trade, money was invented before written history began. Consequently, any story of how money first developed is mostly based on conjecture and logical inference. Letters of credit, paper money, and non-physical money have greatly simplified and promoted trade as buying can be separated from selling, or earning. Trade between two traders is called bilateral trade, while trade involving more than two traders is called multilateral trade.

In one modern view, trade exists due to specialization and the division of labor, a predominant form of economic activity in which individuals and groups concentrate on a small aspect of production, but use their output in trade for other products and needs. Trade exists between regions because different regions may have a comparative advantage (perceived or real) in the production of some trade-able goodsincluding the production of scarce or limited natural resources elsewhere. For example, different regions' sizes may encourage mass production. In such circumstances, trading at market price between locations can benefit both locations. Different types of traders may specialize in trading different kinds of goods; for example, the spice trade and grain trade have both historically been important in the development of a global, international economy.

Retail trade consists of the sale of goods or merchandise from a very fixed location (such as a department store, boutique, or kiosk), online or by mail, in small or individual lots for direct consumption or use by the purchaser. Wholesale trade is the traffic in goods that are sold as merchandise to retailers, industrial, commercial, institutional, or other professional business users, or to other wholesalers and related subordinated services.

Historically, openness to free trade substantially increased in some areas from 1815 until the outbreak of World War I in 1914. Trade openness increased again during the 1920s but collapsed (in particular in Europe and North America) during the Great Depression of the 1930s. Trade openness increased substantially again from the 1950s onward (albeit with a slowdown during the oil crisis of the 1970s). Economists and economic historians contend that current levels of trade openness are the highest they have ever been.

Etymology

''Trade'' is from Middle English ''trade'' ("path, course of conduct"), introduced into English by Hanseatic merchants, from Middle Low German ''trade'' ("track, course"), from Old Saxon ''trada'' ("spoor, track"), from Proto-Germanic ''*tradō'' ("track, way"), and cognate with Old English ''tredan'' ("to tread").

''Commerce'' is derived from the Latin ''commercium'', from ''cum'' "together" and ''merx'', "merchandise."

History

Prehistory

Trade originated from human communication in prehistoric times. Prehistoric peoples exchanged goods and services with each other in a gift economy before the innovation of modern-day currency. Peter Watson dates the history of long-distance commerce to years ago. Watson (2005), Introduction.

In the Mediterranean region, the earliest contact between cultures involved members of the species ''Homo sapiens'', principally using the Danube river, at a time beginning 35,000–30,000 BP.

There is evidence of the exchange of obsidian and flint during the Stone Age. Trade in obsidian is believed to have taken place in New Guinea from 17,000 BCE.

Robert Carr Bosanquet investigated trade in the Stone Age by excavations in 1901. The first clear archaeological evidence of trade in manufactured goods is found in south west Asia.

Archaeological evidence of obsidian use provides data on how this material was increasingly the preferred choice rather than chert from the late Mesolithic to Neolithic, requiring exchange as deposits of obsidian are rare in the Mediterranean region.

Obsidian provided the material to make cutting utensils or tools, although since other more easily obtainable materials were available, use was exclusive to the higher status of the tribe using "the rich man's flint". Obsidian has held its value relative to flint.

Early traders traded Obsidian at distances of 900 kilometres within the Mediterranean region.

Trade in the Mediterranean during the Neolithic of Europe was greatest in this material.. Networks were in existence at around 12,000 BCE. Anatolia was the source primarily for trade with the Levant, Iran and Egypt according to Zarins study of 1990. Melos and Lipari sources produced among the most widespread trading in the Mediterranean region as known to archaeology..

The Sari-i-Sang mine in the mountains of Afghanistan was the largest source for trade of lapis lazuli. The material was most largely traded during the Kassite period of Babylonia beginning 1595 BCE.

Adam Smith traces the origins of commerce to the very start of transactions in prehistoric times. Apart from traditional self-sufficiency, trading became a principal faculty for prehistoric people, who bartered what they had for goods and services from each other. Anthropologists have found no evidence of barter systems that did not exist alongside systems of credit.

Ancient History

Mediterranean and Near East

The earliest evidence of writing is deeply bound up in trade, as a system of clay tokens used for accounting – found in Upper Euphrates valley in Syria dated to the 10th millennium BCE – is one of the earliest versions of writing.

Ebla was a prominent trading center during the third millennia BCE, with a network reaching into Anatolia and north Mesopotamia...

Materials used for creating jewelry were traded with Egypt since 3000 BCE. Long-range trade routes first appeared in the 3rd millennium BCE, when Sumerians in Mesopotamia traded with the Harappan civilization of the Indus Valley. The Phoenicians were noted sea traders, traveling across the Mediterranean Sea, and as far north as Britain for sources of tin to manufacture bronze. For this purpose they established trade colonies the Greeks called emporia. Along the coast of the Mediterranean, researchers have found a positive relationship between how well-connected a coastal location was and the local prevalence of archaeological sites from the Iron Age. This suggests that a location's trade potential was an important determinant of human settlements.

The complaint tablet to Ea-nāṣir, dated 1750 BCE, documents the tribulations of a copper merchant at the time.

From the beginning of Greek civilization until the fall of the Roman Empire in the 5th century, a financially lucrative trade brought valuable spice to Europe from the far east, including India and China. Roman commerce allowed its empire to flourish and endure. The latter Roman Republic and the Pax Romana of the Roman empire produced a stable and secure transportation network that enabled the shipment of trade goods without fear of significant piracy, as Rome had become the sole effective sea power in the Mediterranean with the conquest of Egypt and the near east.

In ancient Greece Hermes was the god of trade (commerce) and weights and measures. In ancient Rome, '' Mercurius'' was the god of merchants, whose festival was celebrated by traders on the 25th day of the fifth month. The concept of free trade was an antithesis to the will and economic direction of the sovereigns of the ancient Greek states. Free trade between states was stifled by the need for strict internal controls (via taxation) to maintain security within the treasury of the sovereign, which nevertheless enabled the maintenance of a '' modicum'' of civility within the structures of functional community life.

The fall of the Roman empire and the succeeding Dark Ages brought instability to Western Europe and a near-collapse of the trade network in the western world. Trade, however, continued to flourish among the kingdoms of Africa, the Middle East, India, China, and Southeast Asia. Some trade did occur in the west. For instance, Radhanites were a medieval guild or group (the precise meaning of the word is lost to history) of Jewish merchants who traded between the Christians in Europe and the Muslims of the Near East.

Indo-Pacific

The first true maritime trade network in the Indian Ocean was by the Austronesian peoples of Island Southeast Asia. Initiated by the indigenous peoples of Taiwan and the Philippines, the Maritime Jade Road was an extensive trading network connecting multiple areas in Southeast and East Asia. Its primary products were made of jade mined from Taiwan by Taiwanese indigenous peoples and processed mostly in the Philippines by indigenous Filipinos, especially in Batanes, Luzon, and Palawan. Some were also processed in Vietnam, while the peoples of Malaysia, Brunei, Singapore, Thailand, Indonesia, and Cambodia also participated in the massive trading network. The maritime road is one of the most extensive sea-based trade networks of a single geological material in the prehistoric world. It was in existence for at least 3,000 years, where its peak production was from 2000 BCE to 500 CE, older than the Silk Road in mainland Eurasia and the later Maritime Silk Road. The Maritime Jade Road began to wane during its final centuries from 500 CE until 1000 CE. The entire period of the network was a golden age for the diverse societies of the region.

Sea-faring Southeast Asians also established trade routes with Southern India and Sri Lanka as early as 1500 BC, ushering an exchange of material culture (like catamarans, outrigger boats, sewn-plank boats, and paan) and cultigens (like coconuts, sandalwood, bananas, and sugarcane); as well as connecting the material cultures of India and China. Indonesians, in particular were trading in spices (mainly cinnamon and cassia) with East Africa using catamaran and outrigger boats and sailing with the help of the Westerlies in the Indian Ocean. This trade network expanded to reach as far as Africa and the Arabian Peninsula, resulting in the Austronesian colonization of Madagascar by the first half of the first millennium AD. It continued up to historic times, later becoming the Maritime Silk Road.

Mesoamerica

The emergence of exchange networks in the Pre-Columbian societies of and near to Mexico are known to have occurred within recent years before and after 1500 BCE.

Trade networks reached north to Oasisamerica. There is evidence of established maritime trade with the cultures of northwestern South America and the Caribbean.

Middle Ages

During the Middle Ages, commerce developed in Europe by trading luxury goods at trade fairs. Wealth became converted into movable wealth or capital. Banking systems developed where money on account was transferred across national boundaries. Hand-to-hand markets became a feature of town life and were regulated by town authorities.

Western Europe established a complex and expansive trade network with cargo ships being the main carrier of goods; cogs and hulks are two examples of such cargo ships. Many ports would develop their own extensive trade networks. The English port city of Bristol traded with peoples from Iceland, all along the western coast of France, and south to present-day Spain.

During the Middle Ages, Central Asia was the economic center of the world. Beckwith (2011), p. xxiv. The Sogdians dominated the east–west trade-route known as the Silk Road from after the 4th century CE until the 8th century CE, with Suyab and Talas ranking among their main centers in the north. Sogdians functioned as the main caravan merchants of Central Asia.

From the Middle Ages, the maritime republics, in particular Venice, Pisa and Genoa, played a key role in trade in the Mediterranean. From the 11th to the late-15th centuries, the Venetian Republic and the Republic of Genoa were major trade-centers. They dominated trade in the Mediterranean and the Black Sea, maintaining a trading monopoly between Europe and the Near East for centuries.

From the 8th to the 11th centuries, the Vikings and Varangians