Barter is a form of exchange in which goods and services are directly traded for one another without the use of a monetized means of payment, such as cash, checks, or commercial credit. There are two principal kinds of barter systems: commercial barter, in which the exchanging parties receive their desired goods and services simultaneously, and noncommercial barter, in which the parties enter into a continuing series of exchanges without simultaneous reciprocity and which therefore may or may not be in balance at any particular time. Both types were important to North American indigenous and European settler economies down to the nineteenth century.
During the period of European settlement, for example, commercial barter was central to the trade in furs, arguably the most important locus of economic interaction between indigenous North Americans and European settlers until the mid-nineteenth century. Initially at the armed forts and "factories" of enterprises such as the Hudson Bay Company and later at trading rendezvous where the interested parties met on a more egalitarian basis, indigenous trappers bartered hides and furs for a wide range of European manufactured goods. Similar institutions and relationships also characterized the slave trade, especially at its points of origin in Africa.
During the same period, noncommercial barter (characterized by delayed but direct reciprocities) and gift exchange systems (characterized by indirect reciprocities or competitive and ceremonial giving) were the dominant forms of everyday economic interaction within indigenous North American and European settler communities among both men and women. Little is known about the noncommercial and gifting systems in the many different indigenous societies encountered by European settlers and their descendants, though scholars agree that the introduction of European goods and practices ultimately undermined indigenous independence and traditional ways of life. Enough is known about the noncommercial barter systems of the European settler societies of North America, however, to conclude that until the nineteenth century, especially in the countryside but also in the cities, most of the goods and services exchanged among settler households, and even between households and many merchants, were part of a noncommercial barter system; that is, they were paid for with other goods and services, usually after a considerable delay but without marked interest charges. Money and monetary (or commercial) exchange also played a significant role in European and European settler societies during this period, of course, especially among mercantile and urban elites. But money did not begin to be readily enough available to function as a means of payment in most people's everyday transactions until the early nineteenth century.
The transition from a predominantly noncommercial barter economy to a predominantly monetized and commercial one depended, first, on the growth of new technologies and means of distribution capable of supplying the effectively insatiable demand of consumers for an ever-increasing diversity of goods and services, and second, on the spread of deposit banking, banknotes, and other credit-based financial instruments that were acceptable means of payment in most circumstances and of which there was an essentially limitless stock (unlike, say, gold, tobacco, "made beaver," or any of the other material goods that otherwise served as a universal means of payment). It is important also to note that the Revolutionary War and U.S. Secretary of the Treasury Alexander Hamilton's subsequent fiscal policies, concerned as they were to monetize the economy and ensure the central government of its ability to institute tax policies that could support a modern armed force and government service, provided a crucial fillip to the rise of a modern commercial economy in the United States and to the eventual decline of the noncommercial barter system.