Barter system was prevalent in the earliest stages of man as a commercial animal. Even today, in some of the interior parts of African countries and even in backward regions of India, especially in the non-monetised subsistence sector of some rural and Adivasi areas, barter exchange in some degree is in operation.
There is no use of money or any medium of exchange in a barter economy. “Barter” means direct exchange of goods exchanged against goods. Corn may be exchanged for ox hides, house for horses, pigs for poultry, lemons for oranges, baskets for bananas, shoes for shirts and so on. In the barter system, thus, one has to give some kind of goods to get some other kind of goods.
The barter system is not as simple and smooths a system of exchange as its meaning shows. Many difficulties and inconveniences are inherent in a simple barter.
As a society becomes more civilised and the complexities of economic organisation begin to multiply, exchange through barter tends to become more difficult and complicated.