The trade of the world appears a very complex matter. But in reality it is all nothing but a multiplication of three things. First, a trade directly between A and B. Second, a trade between A and B through the medium of a third party, C. Third, a trade between A and B through the
medium of a third thing, called money.
The art of commerce, like the great majority of other arts, has developed very slowly through a long period of time. Many things which now appear very simple were only learned by the united efforts of a multitude of minds acting for century after century. The primitive idea of using something as a medium of trade, appears to have been to compare a third thing with one of two objects sought to be exchanged, and if this third thing were judged to be of the same value as one of the things to be traded for something else, then to use this third thing as money, with little reference to any other consideration than its presumed equality of value with a certain other thing.
The fact that this money was bulky, or undesirable in other respects, was subordinated to the central idea of obtaining an equality of value. After a long time, by successive and painful steps, mankind discovered that it was both desirable and practicable to have money that was divisible, compact, portable and imperishable. This led to the use of iron, copper, tin, silver and gold as money. Lastly, it has been learned that representatives of value can be used in making exchanges just as effectively, and far more cheaply, than the ancient kinds of money. To us who are accustomed to using representatives of value, and to seeing large amounts of property transferred from one man to another by the transfer of a few small pieces of paper called checks or drafts, it is some what difficult to think of the payment of a dozen oxen, or a thousand bushels of corn, as a money transaction. We are apt to think of it as barter.
The character of an act does not depend on the kind of instruments used in performing it. Murder may be committed either with a gun or a bread-knife. The character of an act depends on the circumstances under which it is committed, on the thoughts which directed a certain course of conduct.
In like manner the principles involved in a trade do not depend on exchange. Whether a certain transfer of property is a barter or a money transaction, depends on the manner in which the thing or things which effect it is used. Therefore the essence of a bargain in which a sack of salt, a dozen beaver skins, a wheelbarrow full of copper dollars, oi a yoke of oxen is used as an aid in comparing values, and as a medium of exchange, is precisely the same as the essence of a trade in which gold or silver coins, or legal tender paper notes are used as a medium of exchange.
For example : a roof is the cover to a building. It may be nearly flat or very steep ; it may be composed of wood, metal, or other substances; but no matter what its form or material, if it perform the essential function of covering a building, it is a roof. It is not the material nor shape, but the purpose and intent which it carries out which determines its definition. A thing is bartered when it is exchanged without being used as a third thing.