I. Introduction
Commerce, exchange of goods that must be transported from one place to another. In ancient times, transporting commodities over any significant distance was an expensive and risky enterprise. This restricted commerce mainly to local markets. As transportation networks improved, commerce expanded considerably. Today commerce takes place between neighboring households, between neighboring cities, and between neighboring continents. Reliable international shipping, mail services, and the Internet enable commerce between people in any location in the world.

II. Commerce in Medieval Europe
After a decline following the breakup of the Roman Empire, European commerce expanded gradually during the Middle Ages, especially during the 12th and 13th centuries. Long-distance trade became safer once merchants began to form associations for the protection of travelers who journeyed abroad. The main long-distance trade routes were from the Baltic and the eastern Mediterranean to central and northern Europe. From the forests of the Baltic came raw materials: timber, tar, furs, and skins. From the East came luxury goods: spices, jewelry, and textiles. In exchange for these goods, western Europe exported raw materials and processed goods. The English sold woolen garments, the Dutch offered salted herring, Spain produced wool, and France exported salt; southern Europe was also rich in wine, fruit, and oil. The Italian and German cities straddling these routes promoted and financed the trade. Nonetheless, throughout the Middle Ages, commerce between Europe and Asia was limited, because overland transport was expensive and because Europe possessed little of value for export to the East.

III. The Rise of Transoceanic Shipping
The development of oceangoing warships and efficient merchant ships in the 15th and 16th centuries led to a rapid expansion of commerce. As the cost of transporting bulky cargoes over long distances fell, grain was imported on a large scale from the Baltic to The Netherlands and other parts of Europe. New ocean routes between Europe and the East allowed imports from Asia at lower prices and in greater volume than had been possible by overland caravan. The discovery of the Americas created trade in new commodities such as tobacco and logwood.

Spanish exploitation of the rich gold and silver deposits in Mexico and Peru transformed the character of international commerce. Europe finally possessed a commodity—precious metal—for which ample demand existed in East Asia. In return for Asian imports, Europe exchanged silver coin minted in Mexico, Spain, Italy, and The Netherlands. Using technology and skills developed in transoceanic navigation, the Europeans captured the Asian shipping trade. European vessels transported Japanese copper to China and India, Indian cotton textiles to southern Asia, and Persian carpets to India. Trade in certain staple commodities grew with incredible speed. Imports of tobacco into England from Virginia and Maryland, for example, increased more than a thousandfold in the 17th century.

As long-distance trade continued to grow, new forms of commercial organizations appeared. At first, informal associations gave way to legal partnership. In Holland, for example, it was not uncommon after 1500 that shareholders, rather than captains, be the proprietors of ships. Shareholding broke down the social barriers among different classes of merchants and enabled individuals to divide their goods among ships destined for different ports. No longer was international trade limited to those who could afford to travel. After the 16th century, the chartered trading company replaced the temporary partnership as the customary way for merchants to organize their affairs. These great companies, created by the state but privately owned and managed, held national monopolies over trade with certain regions.

IV. The Effects of Industrialization
By 1750 the spice trade had been far surpassed in importance by trade in primary products. In the years that followed, commerce was transformed again, this time by the Industrial Revolution. Because the first Industrial Revolution occurred in Europe, that continent was at the center of the global commercial network for much of the 19th century. European economies depended on foreign markets to supply raw materials and to demand manufactured goods. The growth of industrial production, therefore, was accompanied by a rapid expansion of commerce. Between 1750 and 1914, world trade increased in value fivefold. During the 19th century alone, world shipping tonnage grew from 4 million to roughly 30 million tons. European merchants carried the bulk of this trade.

Industrial growth affected commerce in numerous ways. Initially, the increased production stimulated trade in raw materials. The mechanization of European textile production was responsible for a dramatic rise in U.S. exports of raw cotton. After 1850, trade in grain, meat, and wool also expanded. Europe became a steady importer of wheat from North America, Australia, Argentina, and India, paying for its imports with the products of industry.

Another important aspect of industrial growth was the revolution in land transportation. The development of the steam engine and the construction of railroads promoted commerce between coast and interior on virtually every continent. The railroad was especially important in North America, East Asia, and Latin America.

By the end of the 19th century, primary producing regions were no longer the most important outlets for the products of European and North American industry. Increasingly, industrial nations became each other's principal customers, and commerce between the Americas and the European countries took on a multilateral character. The opposite was true for the primary producing regions of Africa, Asia, and Latin America: Many became part of European colonial empires, and nearly all came to depend heavily on a few foreign markets.

V. The Period of the World Wars
Both internal and external commerce suffered setbacks during World War I. Trade taxes and quantitative restrictions were widely imposed, and it took a series of international conferences during the following decade to dismantle them. The dismantling of controls, however, was not always accompanied by the reduction of trade barriers. The United States and many other countries adopted new customs duties in the 1920s.

With the onset of the Great Depression in 1929, commerce was disrupted once more. National commercial policies remained basically unchanged through the end of 1929, but numerous import controls were imposed in 1930 and the following years. Several relatively self-contained commercial areas then came into being: the sterling area, which traded primarily with Britain; the gold bloc, centered on France; and the German and American trading areas. Within this framework, domestic and foreign commerce recovered slowly but steadily during the 1930s, only to be interrupted again by World War II.

VI. Expansion of International Trade
The reduction of trade barriers and the continued expansion of international commerce are two of the notable achievements of the postwar era. Tariff reductions have been accomplished through the General Agreement on Tariffs and Trade (GATT) and by the creation of customs unions, such as the European Union. Although world exports more than doubled in volume and increased in value by a factor of eight between 1954 and 1974, not all countries shared equally in this growth. In the 1950s exports from the industrialized nations of North America and western Europe expanded rapidly, while exports from the developing countries fell behind. In contrast, after 1965 the exports of the developing nations grew most rapidly, in part because of the rising value of oil exports from petroleum-producing countries. The share of world trade held by Japan and the European Union rose, but that of the former Soviet republics and eastern Europe declined.

For the world as a whole, the value of international commerce (exports plus imports) rose from $643 billion in 1970 to more than $10.2 trillion in 1995—despite the efforts of some countries to impose import quotas and negotiate voluntary export restraints. The outlook for commerce across national borders was improved in the early 1990s as member nations of GATT signed a major new treaty that struck down many barriers to free trade and established the World Trade Organization (WTO). In addition, regional treaties such as the North American Free Trade Agreement (NAFTA) went into effect.

VII. Electronic Commerce
The rapid expansion of the Internet in the late 1990s led to explosive growth in electronic commerce (e-commerce)—the exchange of goods and services over the World Wide Web. Industry analysts reported that e-commerce transactions grew from $11.2 billion in 1998 to $31.2 billion in 1999, and they predicted that Internet transactions would mushroom to $380 billion by 2003.

E-commerce follows the same basic principles that traditional commerce follows—that is, buyers and sellers exchange and transport goods from one place to another. But in e-commerce, the exchange is facilitated by networked computers. Buyers order goods and services online. They track the status of their orders via electronic mail, and in some cases, they receive the goods they purchase directly over the Internet. Computer software, digital music and video, online information, and other products and services can all be distributed in electronic formats. In other cases, products ordered online are delivered using traditional shipping methods.

At the close of the 20th century, retail transactions made up the largest part of e-commerce. Consumers purchased computers, airline tickets, hotel rooms, automobiles, clothing, electronics, books, event tickets, food, furniture, and countless other commodities over the Internet. Business-to-business commerce represented one of the fastest growing segments of e-commerce. Businesses ordered supplies and coordinated complicated projects electronically.