History of Barter

Barter both as a form of direct trade, and as a book-keeping entry, has been around much longer than the current “fiat” money that operates in society today. “Barter Dollars” today are essentially commodity-backed money, something which has been in existence since time began.

The origin of barter [commodity-backed] money requires goes back to the beginning of trade in ancient societies, which started with temples and clay tablets in Mesopotamia and Egypt:

“Tax payments [by farmers] became standardised in terms of quantities of wheat or barley grain. These grain standards formed the basis for all the early money of account units, such as the mina, shekel, lira, and pound. Money, then originated not as a cost minimizing medium of exchange, but as the unit of account in which debts to the palace (tax liabilities) were measured. As the area over which taxes were imposed increased, palaces found it useful to farm out tax collections to private farmers. The first evidence of lending at interest comes from the practice of payment of taxes by the tax farmers, who then took bondservants and charged interest on the village debts. ... The clay shubati (received) tablets record these and other debts. Each tablet indicated a quantity of grain, the word shubati, the name of the person by whom received, the date, and the seal of the receiver. The tablets were either stored in temples where they would be safe from tampering, or sealed in cases, which would have to be broken to get to the tablet. Unlike the tablets stored in temples, the case tablets could and did circulate. A debt could be cancelled and taxes paid by delivering a tablet recording another’s debt whereupon the case which recorded the cancelled debt could be broken to verify the debt terms. This was general practice for several thousand years …. In other words, taxes, debts, and price lists existed for thousands of years, with clay tablets circulating before anyone had the bright idea of reducing transactions costs by creating money through stamping precious metals to coins. ... From the earliest times, markets operated on the basis of credits and debits, and even the smallest sales to consumers took place on credit, which could be carried on the books of the merchant for years before being cleared.” Wray, L. R. (2000)., Modern money, in: Smithin, J. (eds) What is Money?, London: Routledge International Studies in Money and Banking, pp. 43/44.

When we refer to the term “barter dollars” in today’s economy we actually refer to what has historically been known as “commodity-backed money” or “representative money”.