The document explores the evolution of trade and commerce from ancient barter systems to modern stock exchanges, highlighting key historical milestones such as the invention of currency and various trading routes. It delves into the Islamic perspective on trade, the reasons behind international trade, and factors affecting currency value and inflation. The conclusion emphasizes the impact of micro and macroeconomic factors on trade practices.

1. IGNITING ENTREPRENEURIAL CULTURE AMONG
STUDENTS
Mrs. LUBNA SURAIYA MBA., M.Com., DIT., M.Phil., PGDE., (Ph.D)
Ph. D Full Time Research Scholar,
Research Department of Commerce,
Holy Cross College, Trichy – 2.
Email id : lubnasadiyah@gmail.com

2. HIGHLIGHTS ON TERMINOLOGY
 Commerce is derived from the Latin word Commercium - Cum "Together"
and Merx, Merchandise.
 Primarily followed traditional self-sufficiency method.
 People exchanged services and goods without using a medium of exchange
(money). From 9,000-6,000 B.C., livestock was used as a unit of exchange. Later, as
agriculture developed, people used crops for barter.
Bartering became popular in the 1930s during the Great Depression.
Introduced by Mesopotamian tribes ( banks
of the Tigris and Euphrates Rivers, Iraq)
Adopted by Phoenicians (Greek, Roman)
and other cities across oceans.
Developed by Babylonian (Iraq)

3. TRADE Vs COMMERCE
1. Trade is selling and buying of goods and services between two or more parties in
consideration of cash and cash equivalents.
2. Trade includes domestic and international trade.
3. Trade is carried on where buyers and sellers exist.
4. Limited working capital is enough for trade.
1. Commerce includes the exchange of goods and services along with activities viz.
banking, insurance, advertising, transportation, warehousing, etc. between producer and
ultimate consumer.
2. Includes trade and auxiliaries to trade.
3. It is the movement of goods from production to the place of consumption.
4. Huge amount of working capital is required for commerce.

4. ORIGIN OF TRADE
Trade Before Civilization : Paleolithic Stage of the Stone Age
1. The Stone Age began roughly 2.6 million years ago.
2. Stone tools were used for hunting and people were self-sufficient.
3. Traveled in search of food and shelter.
4. Trade was conducted in relatively within small communities.
5. No concept of farming and merchants.
6. Currency used was Barter System.

5. The First Long-Distance Trade: Obsidian & Agriculture (17,000 BC - 9000 BC)
Commodities in the form of livestock, salt, metal, rare stones etc are the currency used
during this period.

6. Matured Trading System (8,000 BC - 6000 BC)
1. People have now learned the art of farming, domesticating animals.
2. Agriculture is booming and a food-producing economy has emerged.
3. Pottery traditions were on the rise in parts of the world now known
as Asia, Japan, Korea, China, Mexico. Expanded to Indus Valley, Jordan, Ireland,
Anatolia, Scotland, North America, Nigeria, Turkey, Norway, Italy, Europe, Egypt etc.
4. Ornaments (Gold & Copper) came into existence and were in huge demand around the
world.
5. Newly settled people started importing exotic goods over distances.
6. Money in the form of objects such as weapons, metal artifacts, pottery, copper, plant
produce was the currency used.

7. Wheel Invention (5,000 BC to 4000 BC)
1. The invention and development of Wheel is an important part of the trading history.
2. Greater ability to produce food, manufacture goods, and transport people and goods at a
greater distance.
3. Communities started expanding.
1. The 5th -4th millennium is an important part of trading history.
2. Proto-writing (the first form of writing) was discovered.
3. People were now able to commute and communicate better.
4. Currency used are Barter, clay pots or tools, seeds and grains.

8. The Caravans of India (3,000 BC - 1000 BC)
1. Ebla (Syria) became a prominent trading
center in the third millennium.
2. By 2nd millennium BC, former backwater
island Cyprus had become a major
Mediterranean player carrying its vast
copper resources to the Near East and
Egypt.
3. Phoenicia famous for its seafaring
expertise. (Maritime)
4. China prospered by trading emerald,
spices and later, silk.
5. Britain shared its abundance of tin.
6. With the domestication of camels, trade
routes over land became popular and the
group of traders called Caravans used
these trade routes to carry trades with
India and Mediterranean.
7. Frankincense and myrrh which was
used as oil, perfume, incense and
medicine which was only found in the
southern end of the Arabian Peninsula
(modern Yemen and Oman).
8. Currency used were Gold, silver,
bronze, cattle, cowry shells, salt,
commodity exchange etc.

9. Trading Routes: 700 BC to 1500 AD
 The city of Vulci became the hub of trading and manufacturing center.
 Greek colonists set up trade centers at Salona.
The Han Dynasty opened up the ‘Silk Road’ trading route between China and Central Asia.
 With the start of 7th century AD the ‘Tea Horse Road’ was used to trade Chinese tea and
Tibetan warhorses.
 Trans-Saharan Trade Route from North Africa to West Africa traded gold, salt and clothes.
 Caravans would carry goods across the Sahara desert.
 Currency used were metal shaped small knives and spades made of bronze.

11. Evolution of Stock Exchange
East India House in Leadenhall
Street, London

12. 1531: Belgium boasted a stock exchange in Antwerp. Brokers and money lenders would
meet there to deal in business, government and even individual debt issues.
1600s: East India companies formed which changed the way business was done. The stock
of these companies would pay dividends on all the proceeds from all the voyages the
companies undertook. These were the first modern joint stock companies. This allowed the
companies to demand more for their shares and build larger fleets. The profit for investors
was based on the size of the companies, combined with royal charters forbidding
competition.
1773: The first stock exchange in London was officially formed.
1875: BSE, on the other hand, was set up in the year 1875 and is the oldest stock exchange
in Asia. It has evolved into its present status as the premier stock exchange.

13. ISLAMIC PERSPECTIVE ON TRADE
 During the Islamic Golden Age, Muslim trade network extending from the Atlantic
Ocean and Mediterranean in the west to the Indian Ocean and South China Sea in the east,
and covering most of the Old World.
 Islamic coins were the Dinar - a Gold Coin and the Dirham a Silver Coin. Dirhams were
being circulated throughout the Afro-Eurasian landmass from 7th -13th centuries.
 From the 8th -13th centuries many crops and plants were planted spreading farming
techniques in Muslim lands.
 From the 11th -13th centuries, the Karimis 50 Muslim merchants or business group
controlled by entrepreneurs who were from Yemen, Egypt and Indian origin came to
dominate much of the Islamic world's economy.

14. WHY DO COUNTRIES TRADE?
Shortage of own nations resources Technological Advancement
Competition
Political strata

15. Demand and Supply forces Export Import Modules
Prevent Monopoly Production leads to standard of living

16. Credit Crunch
Diversification : Cyclical ups and downs in every
economy.
Foreign Currencies
Alternative choice

17. Factors of Production Goodwill or Reputation : Japan
has earned a lot of goodwill in
foreign markets due to its exports
of quality electronic goods.
Fluctuations in business cycle Economic Integrity

18. Vicious
Circle of
economic
process
Production
Profit Margin
Savings (S)
Capital
Formation
(K) and
Investment
(I)
Per Capita
Income (PCY)

19. CURRENCY
Meaning of Currency
Currency is a generally accepted form of money, including coins and paper notes,
which is issued by a government and circulated within an economy used as a medium of
exchange for goods and services. It is the basis for trade.
Different Tradable Currencies
 U.S. Dollar (USD) : Created in 1913 by the Federal Reserve Act, the Federal Reserve
System(also called the Fed) is the central banking body of the United States.
 European Euro (EUR) Headquartered in Frankfurt, Germany, the European Central Bank
the central bank.
 Japanese Yen (JPY) : Established as far back as 1882, the Bank of Japan serves as the
central bank to the world's second largest economy.

20.  British Pound (GBP) : Main governing body in the United Kingdom is the Bank of
England.
 Swiss Franc (CHF) : The Swiss National Bank is viewed as a principal body .
 Canadian Dollar (CAD) : Established by the Bank of Canada Act of 1934, the Bank
of Canada serves as the Central bank.
 Australian/New Zealand Dollar (AUD/NZD) : Reserve Bank of Australia / Reserve
Bank of New Zealand (RBA/RBNZ) is noted as the Central Bank.
 South African Rand (ZAR) : Central Bank is South African Reserve Bank (SARB)

21. ROLE OF BANKS

22. WHO PRINTS CURRENCY IN INDIA ?
RBI has the power to print Indian currency. The banking system in India consists of
public, private, foreign, co-operative and regional rural banks. RBI is solely responsible to
maintain financial stability.
Currency printing press in India worked under RBI.
a. Currency Note Press, Nasik (Maharastra)
b. Bank Note Press, Dewas (Madhya Pradesh)
c. Bhartiya Reserve Bank Note Mudran Pvt. Ltd, Massour (Karnataka)
d. Bhartiya Reserve Bank Note Mudran Pvt. Ltd ,Salboni (West Bengal)
SPMCIL comprises four mints. They are :
i. India Government Mint, Mumbai
ii. India Government Mint, Kolkata
iii. India Government Mint, Hyderabad
iv. India Government Mint, Noida.

23. WHY CURRENCY RATE DIFFFERS ?
Every country experiences different shocks in the business cycle.
The value of a country's currency is linked with its economic conditions and policies.
It launches its currency as per domestic requirement.
Export/import leads to inter-bank network by their central bank (like RBI) for
conversion with other banks of other countries.
Different countries have different currencies because the inflation rate in different
countries tends to be different.
Inflation rates are adjusted through currency appreciation/depreciation. This is the basic
theory, called Purchasing Power Parity (PPP).

24. DEVALUATION OF RUPEE
Devaluation : Decreasing the value of the nation’s currency to other nation’s
currency .
Case 1 : Let's assume $1=Rs. 50
What does this number means ?
Does it means that rupee is weak and dollar is strong?
The purchasing power of the two currencies cannot be deciphered.
The answer is NO.
Case 2 : The Book in India costs Rs.100 . Now you bought the same burger for $2 in US.
Since $1=Rs.50
The cost of the book in both the countries is exactly the same, so whether you buy it in
India or US, it doesn't matter. The purchasing power is same.

25. Case 3 : Let's say there is 10% inflation in India. The cost of book after one year increases to
Rs.110. (100*10% +100).
But inflation in The United States is only 5%. The cost of book after one year increases to
$2.1. (2*5% +2). You could have got the book at $2.1.
Had it been $1=Rs.50, you could have exchanged Rs. 110 at a rate of 50 to get $2.2 ( 110/50=
2.2). You could have got the burger at $2.1 in US and could have saved an extra $0.1.
Had it been $1=Rs. 55, $2.1 can be exchanged for Rs. 115.5 ( 2.1 x 55 = 115.5).
Rs. 5.5 saved, burger costs Rs. 110 only.
So in order to keep the real value of the two currencies same (purchasing power to remain the
same). Inflation in India has always been higher than US, that is why the Indian rupee has
depreciated in nominal terms with respect to dollars.

26. REASON FOR DEVALAUTION
i. In 1991, India had an economic crisis. The government had a balance of payment
problem.
ii. Difference between the import and the export in a country (Balance of Payment). The
rupee was devalued to Rs 25/$ as part of the measures to overcome the crisis.
iii. By 1993, liberalization of the economy, the rupee started to slide towards Rs 35/$ mark.
iv. Countries opt for devaluation only to save the economy from external factors and boost
export.
v. Reduces trade deficit and lowers the interest burden on outstanding government debts.
vi. As currency depreciates in the global parlance, exports become more favourable and
imports unfavourable. This boosts the internal economy towards export and internal
usage of own goods.
vii. China is an export-driven economy and in order to sustain, the Chinese government has
been constantly devaluing its currency.
viii. Achieve temporary economic stability.

27. REASONS FOR INFLATION
i. Liberalization
ii. International fuel prices
iii. Supply side constraints i.e. inadequate infrastructure, low productivity,
unemployment, etc.
All these factors surges the Reserve Bank of India to increase the money supply, which
reduces the short term interest rates and increases the inflation.

28. EVIRONMENTAL ANALYSIS
MICRO
FACTORS
MACRO
FACTORS
 Company Policy
 Internal Members
 Employees
 Competitors
 Suppliers
 Social
 Economic
 Political
 Legal
 Technological

29. CONCLUSION