King David I ruled Scotland from 1124 to 1153. He was one of the most revolutionary rulers of Scotland in the Middle Ages.

He founded many of Scotland’s most important towns, or burghs, where markets existed already or could be created e.g. near a castle or an abbey, by giving them a Charter. Traders who lived in the king’s burghs were given special rights and privileges.

Scotland also developed a monetary system under King David. Silver coins were minted to encourage trade and commerce. Before this most Scots exchanged goods by barter.

It is thought that David may have been trying to modernise the Scottish economy and increase royal revenue by gathering in rents and tolls from the new burghs. By the time of his death eighteen burghs had been established; by the end of the reign of William the Lion in 1214 there were some 37 burghs in Scotland and around 50 existed by the early fourteenth century.

Some burghs such as Elgin, Forres and Inverness were founded because the king wished to take strategic control of territory. In 1130 the earldom of Moray was suppressed and the crown took over direct control of the province. Castles, and the burghs to service them, were established to increase royal control in the region as well as to increase royal revenues. In western Scotland burghs like Ayr, Lanark and Dumfries, associated with royal castles built around rebellious Galloway, also had an important strategic role.

The earliest burghs were first and foremost trading colonies with a high proportion of foreign residents. Merchants settled there from England, Normandy and especially Flanders. Settlers to the burghs were offered a piece of land rent-free for a certain period known as "kirset", usually a year or possibly longer. The merchants had to build a house on their burgage plot, which could be inherited or purchased, to qualify for burgess privileges. These included a monopoly over exports of wool, hides and animal skins.

Burgesses also enjoyed freedom from tolls throughout Scotland. In return for these benefits burgesses, as tenants of the king, were required to make a substantial contribution towards occasional royal taxation; in the thirteenth century this amounted to a third of national levies.

The usual plan of a burgh, found throughout Western Europe, was a single main street widening into a market-place with the burgage plots running back at right angles in a herring-bone pattern, often ending in back lanes running parallel to the main street. As population increased burghs expanded by the creation of new blocks of burgages, usually at the ends of existing streets. Sites of friaries often marked the boundaries of medieval towns, e.g. St. Andrews, from the mid-thirteenth century onwards. Few burghs had defences apart from the protection provided by close proximity to a castle; although William the Lion ordered Inverness to build a ditch and palisade and Berwick in 1296, when attacked by Edward I in 1296 had a rampart and ditch. Berwick found, however, that her defences failed to save her!

In early burghs large grants of property were made to religious houses. The abbeys owned much more property in Scottish towns in the Middle Ages than the nobility, which increased during the twelfth and thirteenth centuries as a result of gifts and outright purchase. The abbeys used their houses as accommodation for the abbot if the king required his presence in the town. Land in the town could be rented out as a source of income or buildings in the towns could be used to handle the abbey’s exports of wool and other goods or arrange for imports for the abbey. By the fourteenth century, town property was increasingly being granted to the orders of friars. The friars said prayers for the townspeople, provided aid for the poor, accommodation for travellers and education. Hospitals for the care of the sick and elderly also existed within the burghs, while leper hospitals were located a short distance from the town.

Nearly 40 buildings have been excavated from the medieval layers of Scottish towns. Many houses and workshops were of simple post and wattle construction. Wattle was plastered with clay, dung or possibly turf and was either set directly into the earth or into a sill beam, sometimes on stone foundations that slowed rotting. These buildings probably lasted no longer than 25 years. Walls of timber planks have also been discovered but these were probably more expensive than wattle and were probably less common. Many of the excavated buildings appear to have been single-storey structures with only one room but two-storey houses also existed; though some of these may have been divided into flats. The houses were almost entirely built with wood, wattle and thatch; stone construction was rare before the sixteenth century. Fire must have been an ever-present danger in these times.

Domestic refuse was often thrown out into the backlands although archaeological evidence suggests some of the rubbish came from the wealthier houses sited in the forelands. The backlands were also used for keeping horses, cattle, pigs, geese and poultry and we believe that the houses here often belonged to craftsmen and were built above their workshops.

The largest burghs may have had populations of more than 2 000 in the late thirteenth and fourteenth centuries, but in most other burghs the population was probably numbered in hundreds rather in thousands. Local trade must have been important, with foreign trade merely the icing on the cake. Because Scotland's export trade concentrated heavily on raw materials, and because Bruges craftsmen were able to flood the domestic market with a wide range of manufactures, urban industry remained small even up to the sixteenth century. There were far fewer craft guilds in Scotland than in England although a survey of surnames in Perth in the thirteenth century point to the existence of craftsmen in basic trades such as tailors, tanners and smiths as well as specialists like armourers and goldsmiths. It is possible that the Wars of Independence, by cutting Scotland off from continental suppliers, stimulated domestic crafts like pottery manufacture, metal and wood working, hides preparation and processing and brewing.

The guilds were formed by strong groups of craftsmen and burgesses to defend and extend their right s and privileges. They looked after their members by supporting widows and helping those who were in business difficulties. The burgh councils were elected from the guild brethren, they administered the law and they took responsibility for organising the defence of the town in times of danger. The guild set quality standards and fixed prices for goods sold in the market. They made sure that only members were permitted to trade; even exporting and importing were under guild control.

The towns and the country areas through the Middle Ages were interdependent; the countryside provided the towns with basic foodstuffs, building materials and fuel as well as goods for trade. The towns arranged for the countryside’s produce to be marketed and distributed.