Before the rise of the towns, the feudal system was the prominent way of life. Serfs would work on the land of a wealthy noble or knight in exchange for protection from invaders. But as villages grew larger and needed protection in the form of walls and battlements, more and more people moved into the towns. As the Crusades were going on, these towns were attractive for people looking for protection and a new life.
Serfs who had formerly worked for nobles, bought their freedom and either went to the towns in search of a living, or stayed on the land, but as free men. Some also joined the army, which, at the time, was out fighting in the Crusades. What happens when many people live in the same area, such as a large town? Merchants and business arise. Economy was developing in the towns where free men, (and few runaway slaves), had taken refuge in.
Guilds were formed in the wake of the growing economies. Guilds were special groups of people who worked in the same trades, for example, carpet-makers, weavers and woodworkers. Guilds had a peculiar way of doing business. The members of guilds would set fixed prices for their products or services that all the members of a guild had to sell at. Otherwise competition would arise, leaving some of the guild’s members less wealthy, and some more wealthy. A town’s economy was affected because of the fixed markets that guilds had set, for better or for worse.