This section is from the book "Elementary Economics", by Charles Manfred Thompson. Also available from Amazon: Elementary Economics.
Until less than two hundred years ago practically all of the productive processes were carried on in the homes, either by hand or with the aid of crude tools and machinery which showed little improvement over those employed in the Middle Ages. Weaving, the chief manufacturing industry in England at that time, was done by men, like Silas Marner, who gave it their entire attention, or by the peasant farmers and their families, who combined weaving with agriculture. At one time the typical weaver bought his thread in the market and there he also disposed of his cloth. Later, so-called capitalists furnished thread to weavers and paid them for their labor, sometimes even supplying them with looms. Gradually, then, there began to emerge, in addition to the independent weavers, two classes of producers: one owned a portion or all of the capital invested; the other class did the weaving. Iron-smelting, machine-making, the manufacture of shoes, clothing, and hats, and practically every other form of production was carried on in a similar manner. The important thing to notice in this connection is the rise of a capitalist class which undertook to supply workmen with raw materials and machines and to dispose of the finished product.
 
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