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Question

Difficulty: EasyHistorical Background and Development of Commerce in Nigeria

During the historical development of commerce in Nigeria, early trade relied heavily on the barter system before commodity currencies like cowrie shells and manillas were introduced. Which of the following was the major drawback of the barter system that led to the adoption of commodity money?

  1. The requirement for a double coincidence of wants between exchange partnersAnswer
  2. B
    The inability to separate trade from auxiliaries such as banking and warehousing
  3. C
    The classification of personal direct services as commercial occupations
  4. D
    The restriction of exchange activities strictly to foreign trade routes

Answer

The requirement for a double coincidence of wants between exchange partners
The fundamental flaw of the barter system in pre-colonial Nigeria was the difficulty of finding two traders whose needs aligned exactly (the double coincidence of wants). To solve this problem, accepted commodity currencies such as cowrie shells, manillas, and brass rods were introduced as standard media of exchange.

Step-by-Step Solution

1
Identify the primary mechanism of pre-colonial Nigerian commerce prior to metallic or commodity money.
The initial medium was direct trade by barter, exchanging goods directly for other goods.
Understanding the early baseline of commerce in Nigeria.
2
Analyze the main economic inconvenience inherent in direct barter exchange.
Trade could fail unless Person X wanted what Person Y had, and Person Y simultaneously wanted what Person X had.
Pinpointing why commodity money (cowries, manillas, brass rods) was introduced.

Key Concept

Development of medium of exchange in early Nigerian commercial history
Estimated Time:45s
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Topics

Historical Background and Development of Commerce in Nigeria