Out of the Lord's portion, his retainers were supported and the handicraftsmen, who contributed to his luxury and power, were paid.
But the Barons were not the only force in Feudal society. The associations of handicraftsmen, merchants and bankers, that can be readily traced through the Greek and Roman civilizations, had continued to live and appear in cities of their own, where they carried on the manufacture and directed the trading and commerce of their time. As Feudalism grew in age the "Guild cities" grew in population and importance. Fifty-seven of them formed a league, which performed all the functions of an independent government. They made war, entered into treaties of peace, guaranteed the independence of petty kingdoms in return for monopolies in trade, and in every way labored to make themselves more powerful than the Barons.
Within the walls of these cities or "bourgs" gathered the merchants and skilled craftsmen, where they produced and distributed a vast portion of the wealth of their time. Guildmaster, journeyman and apprentice lived and worked together. The shop was in the dwelling house and goods sold at prices fixed by the guilds.
The guildmasters finally subdivided labor. They found that, by limiting the workman to a single portion of the process of manufacture, production could be increased and the importance and privileges of the journeyman be greatly reduced. The guild system was disrupted by this innovation—the workshop was removed from the guildmaster's house to a separate building—the "factory system" was born.
Here also was Capitalism born. The manufacturer and merchant prince step upon the scene. The tools of the craftsman pass out of his ownership and become the property of the factory owner. A class of workers appear, who have only labor-power to sell and must go to
