BARTERING -- the giving in exchange, the trafficking by exchange of

commodities, the trading by direct exchange of goods.

The concept of bartering is as old as time itself. This is the method

by which prehistoric man went about his business and this practice of

trading has continued virtually unchanged down the centuries. It is

common in Canada, especially in the rural areas, among hunters and

animal traders, and also in the US. I understand it is also still

practised in parts of Europe. It has, however, been rare in this country

in modern times -- until now, that is.

A company which is supervising the reintroduction of this method of

trading is Anglo Bartering. This private limited company was established

last year by a group of businessmen who had been active in commodity

trade exchanges and in related similar activities for a significant

number of years. They came together in the shape of a group of

self-employed people to form this new venture and it has grown quickly

since its inception to having 11 branches in England and one in

Edinburgh.

It is expected that more branches will open in Glasgow, Dundee,

Aberdeen, Perth, and Inverness. And in some areas this company could

come into competition with the clearing banks (especially where smaller

trading businesses are concerned).

Managing director Bill Hamilton said: ''Unlike barter in bygone days,

where buyer and seller were required to barter or exchange one commodity

-- and only one -- for another of like value by means of a single

trade-off, Anglo Bartering operates a sophisticated system of trade

credits, effectively replacing cash as a means of non-convertible

currency.''

The reason it can be put into practice is that it has devised a

sophisticated computer-controlled network database. This allows those

companies which are members of Anglo Bartering to trade with each other

and to buy and sell goods and services without the need for any exchange

of cash.

The currency used is called a trade credit or a trade pound, being the

equivalent in value to a pound sterling. Trade credits or trade pounds

are used to represent the value of the goods or services which are being

exchanged.

This seems to be the reintroduction of a useful concept but what is

the bottom line here? I can hear Mr Hotelier, Mr Joiner, Mr

Candlestickmaker, or Mr Whoever asking what is in it for him at the end

of the trading day or week or month.

Anglo Bartering literature gives the answer. It states that the system

is risk free for everyone and it adds: ''When you pay the #250

membership fee, your account is immediately credited with 500 trade

credits -- that's our investment in your value to the system. We can

take a position in your surplus inventory in exchange for spending power

now. If you have an extended line of credit, we bring you new customers

to enable you to repay that credit without affecting your existing

business. The person who knows most about your business is you, so it is

up to you to decide the frequency and amount of your barter trading.

Bartering is an addition to your existing business.''

What about the mechanics of the system?

Let us assume that the businessman introduced some of his goods or

services into the bartering system and that the value was #1000. He

would receive 1000 trade credits or trade pounds. He would then buy

whatever he wished from any other member of Anglo Bartering at a price

which was agreed between these two members. He would pay for the

transaction with trade credits and the amount of the trade credit would

then be transferred from the account of the buyer to that of the seller.

Where the real value of using trade credits in barter deals, however,

comes into the equation is that the system offers total freedom and

total flexibility. One simply does not have to barter one commodity for

another of like value in a single trade-off, nor does one have to sell a

set of goods or services at the same time or in the same volume or at

the same rate as those which one wishes to purchase. In fact, one does

not have to sell a single trade credit's worth of goods before making a

purchase through the system.

Mr Hamilton explained: ''If you calculate how much surplus inventory

you are likely to have over the next year, we will take a position in

that inventory and credit you with that amount to spend now. In

addition, we will contract not to dispose of the surplus inventory

through your normal distribution network and we will draw it down only

when it suits you. Why? Because it leaves you free to trade flexibly to

your own advantage without delay or penalty.''

Every member of Anglo Bartering deals with what the company calls his

personal trader who acts as a kind of agent. To make a major

acquisition, the buyer gets in touch with the personal trader even if

the asking price is above the existing credit balance and even in the

unlikely event of not having anything by way of goods or services to put

immediately into the the system.

Mr Hamilton said: ''What Anglo Bartering does is to extend a credit

overdraft or loan account to spread the cost. We do not require security

or guarantees and there is no interest payable. In addition, we do not

set a time limit on the overdraft nor do we in any way restrict trading

until the overdraft has been cleared. All we ask is that an agreed

percentage of the trade credits which one earns is posted to the loan

account, leaving the balance in the current account for normal ongoing

trade purposes.''

The nicety of the system is that, if one puts goods and/or services

into the barter pool, one pays nothing. It is only when one barters

something out of the pool that one pays -- and the amount which one pays

to Anglo Bartering is 9.5% of the value of the trading.

Anglo Bartering (Scotland)'s Graham Nicol acts as one of the personal

traders whose remit is to bring interested partners together and the

beauty of the system here is that it is based on a computerised system

of easy-to-access goods and services available to its members for barter

throughout the UK network. This network is controlled from the company's

head office in Brighton, where a database ensures a comprehensive,

continuously up-dated, and daily monitoring of members' requirements and

transactions.

The company gives a metaphorical example of a trading situation which

incorporates the following items: building maintenance, entertainment,

advertising, legal/accounting, vehicle maintenance, printing, and

leasing. It shows that, by means of bartering these items, the

expenditures for these items are reduced by more than 90%, thereby

increasing cash flow and net profit.

It then asks the question: ''Look at your last set of accounts. How

much cash did you spend on accountants and legal fees, advertising,

vehicle maintenance, travelling, promotions, building maintenance,

printing and -- dare we mention it? -- bank interest charges? What

difference would it make to your bottom line if you had to spend only

9.5% of that amount in cash?''

What difference would this indeed make to the bottom line of business?