Trade by Barter

TRADE BY BARTER § 1. Advantage of trade. § 2. Barter. § 3. Some trading terms de fined. § 4. The problem of price in simple barter. § 5. Demand. § 6. Supply. § 7. Limits of advantage in isolated barter.

§ 1. Advantage of Whenever two persons having valuable goods meet, there is a chance that their valuations of goods at that time will not be the same. One person may have more food than he needs at the time but be lacking in clothing. If each gives to the other some of the good which to him has smaller value, and receives some of the other good, in an amount which to him is more valuable, each of the two parties will be the gainer. This mutual giving is trade. Trade increases the range of choice open to men. Each good that can be traded takes on a new importance, that of pro curing other things in trade. In addition to its own power to 1 Definition of trade. Of several meanings that the word trade has had, two are still usual: (1) a regular occupation, more especially a handicraft, as the carpenter's trade, to learn a trade, used thus in reference to labor problems, the trade union, etc.; (2) an exchange of goods. In the latter sense it may have a general meaning, (a) an exchange of goods whether made by the use of money, or otherwise, when there are several traders present or only two; or (b) exchange between two traders, without the use of money. Usually it has this meaning in such expressions as "a horse trade," a "knife trade," etc. Used verbally, to trade has as synonyms: (a) to exchange, to traffic, and (b) to barter, to truck, to swap, or swop, used colloquially in England and Scotland as well as in the United States. We shall use "trade" in the broader sense (2a) of exchange by whatever means, and shall employ the word barter in the special sense (2b) of trade without the use of money, while we may call cash trading, or monetary buying and selling, the case of trade where money is used.

42 gratify a desire, it gains a representative quality and appeals to desires with the power of all the other objects for which it can be traded. It draws its value from two or more sources,

one source being its own direct uses, the other sources being the uses of each thing for which it may be traded. This led men to speak of value-in-use and value-in-exchange. But it must not be thought that an object has to any one person two values at once ; for as each good had before but one value at a time to any one person tho it had many uses, so when it gets the trading use, it continues to have but one value at a time, as determined at the margin of least urgent desire? Readiness to trade shows a man's desire to redistribute his goods in accordance with the principle of substitution. He virtually says: "Part of what I have I am ready to give for part of what you have." The relative strength of his de sire for the other good is expressed in part by the amount of his offer. When he makes this comparison and this offer, he enters into the social, economic relation of trade with his fellows.

§ 2.

Barter. Trade without the use of money or even the form of the money-expression, is rarely seen by the city boy to-day. Yet it has played a great part in economic history. In early societies the differing natural products of different localities were the most usual objects of trade. Salt, so es sential to life, is on the whole plentiful, but it is found in comparatively few places, in rare springs, and in the salt seas, and was eagerly brought from great distances. Copper, when it took the place of stone as the material for weapons of de fense or of the chase, was sought far and wide. Rare shells, feathers, jewels, and the precious metals appealed in early times to a universal desire for ornament. Products like these were in early times the objects of a rude sort of trade, which took the form of gift-making or of barter, accompanied by much higgling, in the simple efforts to adjust possessions better to desires. In the Middle Ages, outside the cities, which were 2 See ch. 4, see. 9.