Barter System

Introduction:- 
                                      A system of direct exchange of one commodity or service for another without the use of money is called barter. This system was popular in economy before the invention of money. Under this system there was no money so there was no medium of exchange. One had to exchange the product which he had in excess with those who had surplus product with themselves. Barter system was common at an early stag of man's economic life when the wants were limited. Man could easily satisfy all his wants which he produce himself. But as time passed, his needs began to increase. He lost his self sufficiency. He began to produce some goods in greater quantity then he could consume himself. The purpose was to exchange some of his products which he had in excess. In old ages and still in backward areas the blacksmith, carpenter, cold merchant etc. generally receive wheat in exchange for their goods and services.

Definitions:-
R.H.Parker says:    

                         "Barter is the direct exchange of goods and services without the use of money as either means of payment or a unit of account."

G.Thomas says:

                         "Barter is a form of trading n which goods are exchanged directly for other goods without the use of money as an intermediary." 

H.S.Sloan says:"

                         Barter is the direct exchange of one commodity or services for another without the use of money."

 In Simple words: 

                          "The direct exchange of surplus commodity for commodity with another person without the use of money is termed as barter in economics."

Features of Barter System:-
The main features of barter system are as under: 

1.  Barter system is direct exchange of goods and services.
2. It requires the double coincidence of wants. 
3. Barter system eliminates the use of money. 
4. It generally flourishes among uncivilized and backward communities. 
5. It is possible only if the wants of members of a community are very limited.
6. Barter system is possible where the area of exchange is limited. 
7. It is possible where the ratio of exchange between two commodities are determined. 
8. It is now used in the modern foreign trade because of having good impact on balance of payment of trading countries.