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History of the Barter System

March 22, 2018

Source: As the world of commerce changes and businesses look to keep up with the vast menu of developing electronic payment systems, one form of payment between small businesses has made a comeback—its called barter.

Barter has been around well before national or worldwide currencies. Prior to organized economic systems that instituted paper money as the representation of the value of one’s goods or services under the control of banks and governments, there were only a few ways to purchase products. One of the most common practices of commerce exchange was to trade goods and services for ounces of gold, silver, copper, or precious gems. Not everyone had these commodities at their disposal, and so barter became very popular with the common man.

Barter is the exchange of a good or service directly for another good or service of that of equal or greater value, without using a formal method of organized exchange such as money. This simple process allowed for merchants, farmers, hunters, fur traders, transit providers, and traders along the ancient spice routes to conduct business for items they needed yet could not afford with gold or silver. This exchange was extremely popular in trading for goods from Far East versus goods which were popular in the West, since the exchanges were immediate, and each party could then return to their respective homeland to sell their new rare commodities for more localized needs.

Barter has also assisted to keep economic trade afloat during times of financial crisis. When either money was valued as to low (deflated) or to high (inflated) individuals would trade a product for product, depending on their own agreements between them. When currency was unstable, barter always became the preferred method exchange since goods and services were always available when money was not. In times of hyperinflation, the commoner could not afford to keep a money supply in “savings” so barter became the best way to get the things you needed.

The earliest of barter was the “silent barter” which occurred between individuals from separate nations which did not speak each other’s native language. The silent barter where simple volumes of goods and services were used as the measuring stick for working out the value of the exchange. Eventually, language barriers were broken down via the consolidation and unification of lands, making barter even more effective and precise during the times of the Old World.

Today, barter platforms and systems have become very sophisticated and offer much more variety then the days of the Old World. During the era of the Old World, one would have to search specifically for another individual whom had what you needed, and in turn, they would have to have a need for what good you had to offer. This made barter very limited since if you did not have some good or service that was high in demand, you were often left without an ability to purchase other goods and services.

Today’s barter platforms and systems have organized groups and genres of businesses, products, and services, assuring that one would have a high probability of barter exchange. Barter has one of the most comprehensive working models, a prime example of how trading services or products in an organized system can still be very highly effective in a world dominated by so many other choices of exchange, especially when it is an exchange between two businesses.

Barter is gaining in popularity since it is immediate upon the exchange. With faith in other national or electronic currency begins to dwindle, barter becomes a great alternative to exercise purchasing power. With the help of modern exchanges for barter, your barter offering has the potential to reach a wider range of audience; a far cry from the old days of trading on the old spice roads in the Old World.

According to the International Reciprocal Trade Association, more than over 450,000 businesses transacted near $10 billion dollars globally in 2008 based on barter. This continues to grow, as it was estimated that in 2010, over 450,000 businesses in the United States alone participated in barter trade, with an estimated 400 barter platforms and companies operating around the world.

If you’re a small business in search for a strategic business advantage, barter can provide options to share your businesses products or services without additional risk to your working capital.

Samuel K. Burlum is an investigative reporter who authors articles related to economic development, innovation, green technology, business strategy, and public policy concerns. Burlum is also a career entrepreneur who currently and lends his expertise as a consultant firm to start-up companies, small businesses, and mid-size enterprises, providing advisement in several areas including strategic business planning, business development, supply chain management, and systems integration. He is also author of The Race to Protect Our Most Important Natural Resource-Water.

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