Echoes Dispatches From Economic History
Patrons exchanged produce, dairy products and livestock for admission to the Barter Theatre in Abingdon, Virginia in 1933. Source: Barter Theatre
The Rise of the Barter Economy
With banking systems reeling, credit shrinking and tariff walls rising, customary trade channels began faltering in 1932. In their place, global and local barter economies developed.
“Following the lead of the United States and Brazil, which traded wheat and coffee, Germany has begun to obtain coffee in exchange for coal, Danish cattle for agricultural implements, and Russian petroleum for electrical machinery,” the Wall Street Journal reported in September.
Other bilateral deals appeared. Finland shipped timber to the U.K. for coal, Argentina traded grain for Spanish railway equipment, and Turkey offered tons of figs and currants for armaments. Germany’s dye manufacturers accepted 720 carloads of wheat from Hungary to settle longstanding unpaid accounts.
These exchanges were the result of the overhang of World War I debts, the collapse of the gold standard, currency devaluations and the explosion of protectionist rules, which had increasingly blocked commercial channels. Governments, trade associations and large companies thus initiated private arrangements in which prices and quantities were negotiated outside market trading.
Exchange rates favored industrially powerful states or regions. But getting some return was surely better than letting crops rot or trying them out as locomotive fuel, as Brazil was doing with compressed coffee beans.
On the local level, dreadful poverty deepened. In rural Japan, villagers were “almost without money, trade being conducted largely by barter,” the New York Times reported. People had been reduced to eating chicken feed and “cooking up the dried fish used for fertilizer and the beancake customarily fed to cattle.”
In the U.S., both organizations and individuals sought creative solutions. Yellow Springs, Ohio, issued a substitute currency, called scrip, and a goods-and-services exchange to ease barter deals. Through this mechanism, a farmer with 100 bushels of potatoes who needed barn repairs didn’t have to find an unemployed carpenter wanting potatoes, but could sell them to the exchange for scrip notes. The carpenter, paid in scrip, could purchase food and other products at the exchange.
In Texas, about 200 ambitious towns created free public markets, which offered homegrown vegetables, fruit, meats, canned foods, honey, syrup, sassafras and tobacco for sale or exchange. Each week, farmers told area chambers of commerce what they would bring on market day, and the chambers published these lists in county newspapers.
One widowed Marylander, Evelyn Harris, detailed her bartering innovations in a Saturday Evening Post essay, “Farming Without Money.” She told how she paid local woodsmen in foodstuffs to convert locust trees to fence posts, traded the posts with the county to settle school fees, and swapped firewood with the grocer for canned goods and staples. Harris exchanged dried corncobs (to use as fuel) for a dozen family haircuts, and, remarkably, shipped apples and homemade sausages to cover her magazine subscriptions.
Others, with fewer resources, would fare far worse as the harvest ended and winter approached.
(Philip Scranton is a Board of Governors professor of the history of industry and technology atRutgers University, Camden, and the editor-in-chief of Enterprise and Society. He writes "This Week in the Great Depression" for the Echoes blog. The opinions expressed are his own.)
Read more from Echoes, Bloomberg View's economic history blog.
To contact the writer of this blog post: Philip Scranton at firstname.lastname@example.org.
To contact the editor responsible for this blog post: Kirsten Salyer at email@example.com.
Bloomberg moderates all comments. Comments that are abusive or off-topic will not be posted to the site. Excessively long comments may be moderated as well. Bloomberg cannot facilitate requests to remove comments or explain individual moderation decisions.