Barter is the oldest system of trading where goods and services are exchanged directly without money. Under a barter system, there must be a "double coincidence of wants" where both traders have something the other wants in order to complete a trade. Other problems with barter include a lack of a common store of value as some goods are perishable, a lack of divisibility as commodities cannot always be divided into small units, and a lack of a common measure of value to assess the worth of different commodities. The difficulties of barter led to the invention of money as a common medium of exchange.

1. BARTER SYSTEM
BY: NAVNEET KAUR

2. WHAT DOES BARTER MEAN?
Bartering is a system of exchange of some goods with other
goods, where no money is involved.

3. WHAT IS BARTER?
• The oldest system of trading.
• Is the exchange of goods and services between two parties
without any involvement of cash.
MEANING: Barter is a medium in which goods/services are
exchanged directly without a common unit of exchange(MONEY)

4. EVOLUTION OF BARTERS….
• History can be traced back to 6000BC.
• First introduced by the tribes of Mesopotamia.
• Initially used to trade weapons, food items , tea and spices.
• Even Roman soldiers salary was paid in barter by offering SALT.
• There have been proofs that purest form of barters were existing till
1874.

5. BARTER: WHAT PROBLEMS COULD ARISE?
What Problems could arise?
Analysis of this Economic system reveals three aspects that are
considered as problem?
Can you guess what they are?

6. LACK OF COINCIDENCE OF WANTS
• In Barter system goods were exchanged through goods.
• In this process wants of both buyer and the seller must
coincidence.
• This is called Lack of coincidence of wants.
• Lack of coincidence of wants make the difficulty of Barter
system

7. • Barter- goods and services were traded without the exchange of
money.
• However, before trade could occur there had to be a “double
coincidence of wants”. Each trader had to have something the other
wanted.

8. • In a barter economy a chicken farmer who wants to buy
shoes may have to first trade chickens for apples and
then apples for shoes because the guy selling shoes
wants only apples.
• Money eliminates this problem.

9. LACK STORE OF VALUE
• Some goods are perishable.
• They perish in a short period.
• So it was not possible to store the goods in Barter system for a
long time.

10. LACK OF DIVISIBILITY OF COMMODITIES
• In Barter system we cannot divide all the commodities into
small units.
• It is also one of the problem of Barter system.

11. LACK OF COMMON MEASURE OF VALUE
• In Barter system the value of every commodity can be
measured in terms of others commodity.
• But it is not possible to measures the commodity value with
other commodity.

12. DIFFICULTY IN MAKING DEFERRED PAYMENTS
• Deferred payment means future payments.
• Under Barter system future payment for present transaction
was not possible.
• The future exchange involved some difficulties.

13. CONCLUSION
•In order to overcome the discussed
difficulties in barter system, money was
invented in economy.