Commerce in the primitive ages was carried on by the exchange of goods or commodities, otherwise known as barter, and without the use of money or credit. Since the time men first came into active contact with each other, they endeavored to obtain their needs by whatever means appeared to them best, and as they were always in need of some particular article, class of goods or merchandise, which another possessed, it became a practice for them to give up an article which was less desirable in exchange for one which they could use to better advantage.

But as men and arts increased, a mere barter of commodities became inconvenient and insufficient in abundance of instances. A better medium of exchange or some standard of computation - of value -capable of being handled much more conveniently than the bulky wagonload of wheat or drove of oxen, became necessary.

In still an early period in the economic history of man, there was established some medium of exchange in the form of goods. Skins of animals at one time constituted a medium of exchange. Wheat, corn and other cereals by the bushel or specific load constituted also an exchange value. Tobacco, wool and other staple commodities also formed a medium of exchange. A better substitute was found in the baser metals, such as iron, bronze, copper, etc., which being put into certain shapes and forms, also served as mediums of exchange. The Romans and the Grecians had coins of bronze, and later of gold. Other races had iron money. The Indians, at the time of the discovery of America were found to use wampum shells as money.

With the progress of man, the general utility of precious metals as a form of money was recognized, and the employment of silver and gold as common measures of value was found to be much more practical than the preceding systems of exchange. By these improved means, one might then, instead of waiting for his crops to mature, or for his sheep or horse to become full grown, employ this gold or silver as a means of acquiring what was most desired.

But, in time, people came to feel the inconvenience of carrying with them a supply of coin and bullion, and became satisfied, in commercial transactions, to accept a promise on the part of the purchaser to pay the amount due at a certain date. This was the foundation of our modern credit system. The people, thereafter, feeling the unsafety attendant upon their keeping such coin and bullion, in the form of gold, silver and other precious metals always in their possession, or hoarded away and unproductive in their homes, entrusted these funds to a class of goldsmiths and custodians of valuables, who were in a much better position to care for them. A fee in the form of a commission was generally paid in consideration of the custodian's services.

Later, the goldsmiths and custodians of valuables, principally the Florentine in Italy, and the Lombardi in England, were quick to realize the opportunity existing in lending out the money deposited with them to others for a consideration in the form of "interest," which the borrowers paid them for the use of this money. The development of this system of lending was coincident with the rise of modern banking.

The next step was the development of a credit system, whereby present values were given in exchange for promises of future performance. Thus, A sells to B a certain quantity of merchandise, and instead of acquiring cash in the sale, which would take it without the bounds of a credit transaction, he takes as a substitution for immediate payment a promise on the part of B to pay the value thereof at a future time.