The story of English industrial development is long and complicated, and its early history is still a matter of controversy among economic historians. Nevertheless, it is almost certain that at the end of the seventeenth century the " gild merchant" had become a mere town council, an exclusive aristocracy that concerned itself only with municipal affairs; while the other great organization, the craft gilds, had been very much broken by a process of amalgamation and evolution of classes that was incompatible with the rigidity of the mediaeval system.
The organization of trade precedes that of industry 1 and the members of the gild merchant in the earliest days of town life had acquired the exclusive rights of buying and selling, and had become a wealthy and powerful class long before the development of local industry had reached the stage of conscious organization. When the workers in industry became more powerful, and, with the penetration of capital downwards, attempted to trade on their own account, their claim was desperately contested by the established authorities of the gild merchant. However, the craft gilds proved the more powerful and were victorious; they are the source of all our later commercial and industrial classes, and this displacement of the gild merchant by the craft gild as the controlling force in industry, corresponds to a parallel displacement of trading capital by industrial capital.2 The craft gild was a combination of the master craftsmen in any one trade, or less commonly in a combination of allied trades,3 in a mediaeval town; and, as most of the necessaries and some of the luxuries were supplied locally, most towns had a fairly complete set of craft gilds by the fifteenth century. By this date industries had so far developed as to make organization essential, but the time had not yet come when the rules of the gilds were considered as obstructions to further progress.
In the infancy of an industry, the master-craftsman combined in his own person the duties of employer, workman, foreman, merchant, and shopkeeper; but during the fifteenth and sixteenth centuries industry developed and a division of these functions took place. The master-craftsman tended, more and more, to confine himself to the duties of employer, merchant, and shopkeeper, thus allowing the journeymen whom he employed to achieve comparative independence, and with the assistance of a very small amount of capital to set up as a small master himself. Following this line of development, there gradually evolved, from the original single class of craftsman,4 the trading master, controlling a fairly large capital, who undertook the duties of buying the raw material and selling the finished product; the small master-craftsman, taking his raw material from the trading master, manufacturing it and returning the finished product to the man from whom he purchased his raw material.
The next stage of development is important. Some of the small masters gradually acquired capital of their own, either by a decline in the position of the trading masters, or by exceptional enterprise and diligence on their own part. As their capital gradually increased they were able to meet the trading capitalist on an equal footing, but instead of assuming similar trading functions they began to employ a larger number of workmen, and organized their industry on an increasingly large scale. The whole trend of English industrial development is for capital to be applied more and more to the actual operation of producing, and less and less to the transactions of buying and selling. This process of class formation occupied about four centuries, from the thirteenth to the seventeenth, and at the date we have taken the classes in existence were roughly:
These class distinctions were made more definite by the adoption of constitutional forms by the gilds, the assumption of control by the trading section, and the exclusion of the poorer members from the attainment of mastership. The essential classes in industrial organization during the sixteenth century were the trading master represented by the Livery Companies, and the small masters represented by the yeomanry organization that had once belonged to the journeyman.
2 Unwin, Industrial Organisation in the Sixteenth and Seventeenth Centuries Ch. 1, passim.
3 Ib.,p. 19
4 Professor Unwin. in his Industrial Organisation, has two very illuminating diagrams which illustrate the separation of functions and the evolution of classes.
5 Unwin,op. cit., p.13