Trade and Barter

  Dharma Deva

Exchange

An exchange is the trading of a commodity for another commodity or for money. Exchanges may be undertaken through either  money, or commodities. In both cases, the transactions involved are called ‘purchases’.

Examples:

X gives Y one kilogram of rice, and  Y gives X two kilograms of vegetables in exchange.

or

X gives Y some cash, and Y gives X an amount of vegetables in exchange.

Barter

Barter trade is the practice of mutual exchange of commodities.

Example:

In a village market a carpenter sells yokes and ploughs. The carpenter exchanges a yoke with another person for a brass container.

In barter trade, there is no cost in terms of money. Barter can occur in local trade and foreign trade. Barter has been used since ancient times.

Rg Vedic Age  (to 7,000 years ago)

In very ancient times (i.e. in the Rg Vedic period), civilization was very backward. There was no such thing as buying and selling in the sense of using money.      The system of exchange in vogue can best be called ‘barter’.

Examples (exchange of commodities):

X gave some barley1 to Y in exchange for a container,  In those days people were not acquainted with wheat or rice.

A gave some lentils to B in exchange for a sieve.  (In those days people were not acquainted with cowpea. They were more acquainted with legumes than with desi chickpeas (Bengal grams). This system of exchange continued for a long time

 After Vedic Age  (from 7,000–3,500 years ago)  

Later, people began to feel some practical inconvenience because they were often not able to get the items they badly needed, and there were no ready markets to sell the commodities they produced. Under the circumstances, people converted the commodities for exchange into some kind of standard wealth to be used as needed. This was the earliest development of commodity money. Then they began to think of ‘media of exchange’.

Sea shells  – as medium of exchange

In India, the first medium of exchange used was sea shells.  Sea shells were the first ‘coins’ (tokens of exchange), with some basic potential for storage of wealth). Used around 4,000 years ago, possibly as early as 5,000 years ago. When sea shells were introduced as a medium of exchange, people felt the need to distinguish this new type of transaction from ordinary barter transactions. Transactions effected through the medium of sea shells (‘tokens’) formed the system known today in English as ‘buying’.

In this regard,   ‘to purchase’ includes to get something through barter or money,   ‘to buy’ means to get something with money.

Sea shells replaced by metal coins

The use of metal coins began to replace sea shells as media in an improved system of exchange. Examples –              Coins were developed to some extent in India around the 6th century BCE. Slightly earlier, coins were developed for use in the 7th century BCE, around 600 BCE by the Lydians, one of the peoples of Ionia. Lydia was a kingdom tied to ancient Greece and located in modern-day Turkey.

Much earlier, starting from around 1600 BCE, cast shapes of copper (tokens) were in use in ancient China, They were given a particular value and used for trade.

The Sanskrit word mudrá becomes ‘token’ in English, meaning ‘something which is represented by a medium’.  The inner meaning of the word ‘coin’ is also ‘token’.

Ancient Bengal barter

Bengali culture is at least 3,500 years old. In ancient Bengal (2,000–1,000 years ago), the exchange of commodities through barter was more popular than exchange through money (tokens). Ancient Bengal had a large number of commodities to sell but very few to buy, yet the Bengali merchants were fond of barter. In ancient Bengal much barter was conducted by the Gandhabanic (traditionally used to trade in perfumes, cosmetics, spices etc.) and ́ Suvarnabánic ( dealing in gold and silver) communities (around ́1,000 years ago), but other merchants also took part.

       Ancient Bengal – preference for barter

The reason for preferring barter was that ancient Bengal had a highly developed ship industry.  Bengali carpenters and fishermen were very proficient in marine industries. Merchants used to take their commodities overseas in order to sell them. Had merchants carried on their business with money, they would have had to sail their large ships back empty. But as merchants engaged in barter, they also returned with commodities. This was one of the main reasons for the popularity of barter in ancient Bengal.

Shipbuilding in Bengal possibly existed since around 1,000 BCE, and became highly evolved for the time at around 100 BCE – 100 CE, continuing with high skills until about 1,200 CE and even beyond.

Bengal trade and barter

Bengal continued to conduct extensive trade and barter trade for a considerable time.

In Bengal: the Sinhalpatan (there is no record available on internet, however there is a village named Sinhalpatan near Hugli), Tamralipta (Tamralipta was an ancient port – city of Bengal, at present situated in Purba- medinipur district of West-Bengal, India) and Chattagram (Chatigram) ports (Chittagong port is the oldest and largest natural seaport and the busiest port of Bay of Bengal, now in Bangladesh) were very famous for trading in imports and exports,

Dhumghat, Berachampa, Mahisadal, Jiivankhali (Genyokhali-Miirjapur), Nalchiti and Jhalkathi were medium-sized ports which were also used for imports and exports.

Flourishing barter trade of Bengal

Bengalees exported very fine rice (badsha bhog – Is rice fit for the consumption of monarchs, used for preparing special rice dishes)  from Birbhum, Samantabhum, Senbhum, Mallabhum, Manbhum, etc., in western Raŕ h, ́muslin (light cotton cloth) from Visnupur, large quantities of black woollen blankets, cotton cloth, fine sal furniture, Bengal gram (chickpeas), sugar, raw sugar, copper, copper goods, mustard oil and chillies from different parts of Bengal, to Southeast Asia, Egypt and Europe.

In exchange for commodities which required large space in their ships, Bengali merchants used to bring back merchandise from overseas countries. In exchange for exports which required very little space, Bengali merchants used to bring back gold coins.

People of Ráŕh – a zone of Bengal         

The people of Raŕ h used to export only the surplus commodities overseas for sale, and import only those commodities which were necessary for the people of Raŕ h́ (such as cloves, medicinal fruit and betel).

“We shall accept cloves in exchange for stag.

We will accept paste for pollen.

We will accept hot spices in exchange for fruit.

We shall accept medicinal fruits in exchange for nuts.”

– poet Mukunda Ram Cakravartii, (man of Raŕ h in Bengal)́

From the Gupta Age onwards barter trade between different countries continued, but in towns and cities it was greatly reduced, while the buying and selling of commodities with money greatly increased. Since the Gupta Age, buying and selling has mostly been undertaken through monetary exchange.

Paper money in China and India

Much later still, paper notes were introduced in China.  Tang Dynasty (618–907 CE) began the use of paper promissory notes. Song Dynasty (960–1279 CE) institutionalised the use of paper notes as currency. Paper notes as currency were introduced in India much later in the 18th century CE. It was a colonial initiative, rather than an indigenous initiative.

International barter – late 1980s

In foreign trade those countries which have a large volume of very few commodities to sell but many commodities to buy could find barter trade profitable.   Otherwise, their reserves of gold bullion may get exhausted.

However, in the modern financial system gold reserves are not typically used on a day-to-day basis to settle international trade balances, most international trade is now conducted in fiat currencies, with the U.S. dollar being the dominant currency for international transactions.

Though gold remains an important part of many countries’ banking reserves as a store of value and as a hedge against economic uncertainty. Barter trade could be advantageous for countries like Indonesia, Malaysia, Cambodia (Kampuchea) and Bangladesh, as well as the Tibet Autonomous Region within the People’s Republic of China.

Note the above was said in 1987, and several decades have passed since, so the situation would have changed. Also, the Dalai Lama on 14 March 2005 stated that Tibet is a part of the People’s Republic of China.

References

•                Trade and Barter in Ancient Bengal – Section A, PR Sarkar, 11 January 1987,
•                 Ananda Marga Publications, Calcutta   Published in:
•                Prout in a Nutshell Part 12 [a compilation]
•                Proutist Economics [a compilation]
•                ‘Kray’ in Shabda Cayaniká Part 10
•                Trade and Barter in Ancient Bengal – Section B, PR Sarkar, 22 February 1987,
•                Ananda Marga Publications, Calcutta   Published in:
•                Prout in a Nutshell Part 12 [a compilation]
•                Proutist Economics [a compilation]
•                Shabda Cayaniká Part 11
•                The annotated Notes were compiled from information obtained by AI prompt crafting using ChatGPT, with the GPT-4 architecture, in November and December 2023.
• Presentation and Annotations updated 25 December 2023

For PROUTIST UNIVERSAL