If you read stories of the time, the price deflation during the Depression (1929-1940) hit the rural areas very hard. You read of country doctors accepting a couple of chickens and a bushel of potatos, in payment for a service, because the farmer had no cash on hand. Prices dropped, and the deflation fed on itself-farmers were denied credit, so they had no money to hire help with, which meant that stores had no sales.
My questions: is there evidence that barter took over on a large scale? After ll, people alays need food, and if a farmer could get his produce to market, he could exchange it for something that somebody else wanted.
A few years ago, I heard about barter businesses-you would take some goods that somebody wanted to sell, and arrnage atrade witha third party-inefficient, but better than nothing, I suppose.
Historically, farmers have never had cash on hand. The classic cycle is that they take out a bank loan in the spring to buy seed, using their future crops as collateral, and then pay back the loan in the fall when the crops are in.
Their situation probably did get worse during the Great Depression because food prices dropped so low, though. (Didn’t they? Or am I misremembering?)
There have always been barter economies in the U.S. Even today a number of small towns and communities have voluntary barter exchange systems on a semi-formal basis.
I don’t know of any large-scale barter systems during the Depression. Barter is simply too difficult to pull off except inside a closed community that can balance all the exchanges and make the swapping of disparate forms of goods easy. It can’t stretch over larger areas, which is why I suspect it never grew big at any time in the 30s.
Money is far superior is every way as a general mode of exchange. Even in the Depression, most surplus goods could be sold. Bartering requires that two parties each have a surplus of what the other wants without the money to purchase it. Unless a barter system is highly organized and a sufficient number of traders brought in to make the selection great enough to cover needs, barter is extremely difficult to make work on an ongoing basis. Farmers are especially vulnerable. It doesn’t help to have excess wheat if all of your neighbors also have excess wheat.
In Catherine Reef’s book Poverty In America (a great read) she went into this. For starters the farmers in America were in a depression way before the Great Depression hit the urban areas. She stated bartering was always a way of life in rural area and in poverty pockets of the urban disadvantaged, it became more known when formerly middle class people experimented with it.
As the Depression deepened it became more common but it was minor part of those economies where money was used prior. She points out that in some areas barter was the method of economy before 1929 and that continued to be as strong as ever.
Interestingly enough when the New Deal programs started to kick in, the poorest of the poor actually saw their standard of living rise. She points out two states West Virginia and Mississipp, saw their entire state’s standard of living go UP in the Great Depression.
In other words it was so bad before any change was an improvement.
A lot of whether you experienced barter as a minor thing or as a major part of your economy depended on your location, your social class and your line of work.
Bartering certainly existed during the Great Depression and it still exists today. But I don’t think there was ever a real barter economy during the depression. To me that would imply that barter had supplanted money and that was never the case. There was never a time during the depression when somebody offering to pay in currency would have been told that paying in goods was preferred - people were always glad to accept money when it was offered.
A more realistic example of a barter economy would have been during the Revolution or the Civil War when the government was printing too much currency and its value dropped. That’s when people didn’t want to accept currency and preferred goods instead.
Food prices dramatically rose during WWI/early 20s as European production was very low, for obvious reasons. That plus the advent of widely available credit lead to wide spread mechanization of farming: farmers were very eager to maximize production while prices were so high, and borrowed in order to buy tractors and things. When European production returned to pre-war levels, the bottom dropped out of the market. Throughout the depression many people saw the problem as one of excessive supply, not insufficient demand, which is why you had crops torched as people starved.
The proble with blaming a recovered Europe for the farm crisis was that was what already being called a Depression happened to famers as early as 1920, which lasted at its worst until 1923.
Though conditions improved somewhat after 1923 - probably because Europe recovered as a market, not the opposite - many farmers spent almost the entirety of the 1920s in a Depression, which is why they were in such terrible shape by the 1930s.
Note from those article snippits that the governmental response in 1921 was the same as the governmental response in 1931: suck it up.
It most certainly did, and large-scale barter did happen, in California and other places. Here’s the location of one of the largest examples, the UXA: http://red-coral.net/UXA_Article.html . There was at least one other large barter system at the time, but I can’t remember the acronym off-hand.
Dan
That’s interesting to read about, but our basic disagreement is about the definition of “large-scale.” In the context of the Depression or even California, a membership of 1500 is tiny. That’s only half a percent of the population of Oakland at the time.
We all agree that groups engaged in barter during the Depression. (And at every time since, including today.) But a barter economy is something different.