Over 7.5 billion dollars in sales is transacted each year by the commercial barter industry. This figure is growing at an estimated rate of 8 percent a year, significantly faster than the growth of GNP. It is estimated that over 300,000 business firms -- most of them small to mid size businesses, but including a large and growing number of well-known larger firms -- will use the services of commercial barter companies this year.
What explains the explosive growth of commercial barter? First, the modern computer makes possible the tracking of barter transactions, which used to be done by hand in colonial times. John Hancock's uncle, a minister by profession, is one of those early bookkeepers who recorded commercial trades of rum and whale oil in exchange for the wheat and furs of the early frontier. If the computer had been available then, our monetary history would certainly have been different.
Commercial barter is a young industry, roughly 25 years old, run by a strong group of entrepreneurs. The leading members of the industry are joined together in the International Reciprocal Trade Association, which has branches in Europe and Australia. It was this group that worked with the U.S. Congress to pass the barter tax compliance provisions of the Tax Equity and Fiscal Responsibility Act of 1982. The same law recognized barter exchanges on a par with banks and credit card companies as "third party record keepers" of the financial records of other taxpayers. All U.S. barter exchanges now submit to the tax authorities yearly total of the barter sales of their clients.
