The world before money

Why did the barter system develop?

James and Jones were brothers who were very excited because their uncle was coming for dinner. He always brought gifts for them and this time he gave James two bars of milk chocolate, while Jones got two packets of chips. After he had left, James said, “Jones I will give you one bar of chocolate if you will give me a packet of chips in return, “James agreed, and soon both the boys were having a feast of a bar of chocolate each, followed by packets of chips each, without having to pay anything. James did not have to buy any chips, and Jones did not have to buy any chocolate. Now, wasn’t that smart of them???

This system of exchanging goods is known as the barter system. Long before our ancestors invested money, they used the barter system o get what they needed. A farmer would exchange bundles of rice for a cow that another farmer had. In this way, both the farmers would have all the rice and milk they needed, without any money having changed hands. A hunter might exchange animal skins for the fish that a fisherman had, or a weaver might exchange cloth for bread from a baker. It was all a matter of giving away whatever extra you had, in return for something you needed.