What is Barter System?

A century ago, there was no money. So, how did people buy and sell at that time?

It all started with the barter system. Imagine, in a kingdom, there were people with different types of work, like cobblers, farmers, trailers, etc.

Barter System

Suppose Ram is a farmer and Rahul is a cobbler. When Rahul needs vegetables, he approaches Ram and exchanges a pair of slippers for the vegetables he needs. It is known as a Barter system.

But the barter system works in the double coincident principle. Here, two coincidences have to happen.

Barter System Examples:

If Rahul needs a haircut and he goes to Pritam, the barber, but the value of the hair cut much lesser than the value of the slipper, and the slipper cannot be divided; hence no barter takes place. Thus, the exchange of goods is not easy. Then the barter system converts to money.

After the covert system, profit and loss also can find in the new system.

1 rupee (1917)

Subdivisions of the Rupees During the 20th Century: