In the days of feudalism the lords quickly perceived the advantages of taxing the various trades that flourished in the towns of their respective estates.
When trade increased this levy became excessive, and the townsmen, seeing that individual resistance was unavailing, formed an association which was known as the merchant guild.
Relations between the lord and the tradesmen thereafter became better regulated.
As the town grew and prospered, the guild usually bought a charter from the lord for a fixed sum or annual payment, and thus became free from his interference.
The merchant guild controlled the entire trade of the town.
This monopoly included the right to fine all traders who were not members of the guild for illicit trading, and also to inflict punishment on those who violated the regulations of the guild.
The guildsmen took part as a corporate body in all religious celebrations in the town, organized festivities, provided for sick and impoverished brethren, undertook the care of their orphan children, and provided for Masses for deceased members.
After its emancipation from the demands of the lord the merchant guild became identical with the municipality itself.
Its spokesman became mayor; its delegates, aldermen; its members, burghers.
The regulation of the particular crafts became an important issue for the citizens in order to restrain high prices, to secure honest work, and to stabilize the market supply.
The individual trades or crafts soon realized that their interests were being jeopardized by these ordinances, and accordingly they rose against the merchant guild as the merchant guild had risen against the lord.
The individual trades then established their own guilds, which were known as craft guilds.
New Catholic Dictionary