Roman Inflation

  • Inflation in Ancient Rome became a problem during the Third Century CE.
  • It was caused by the gradual Debasement of the Gold Coin, the Aureus and the Silver Coin, the Denarius.

How Debasement led to Inflation

    • The Roman Government insisted all Taxes be paid in Gold or Silver. However, new Gold and Silver coins were continually debased.
    • As a consequence, Prices were increased to cover the shortfall and Inflation became a chronic problem.
  • The Gold Aureus
  • Debasement of the Aureus Gold Content
  • The Aureus is replaced by the Solidus

Roman Financial Crises (33 CE – onwards)

  • Tiberius (14-37 CE)
    • Roman Financial Panic of 33 CE was a banking crisis which occurred under Tiberius (14-37 CE).
    • It was resolved in just a few weeks by the lowering of interest rates to zero and the provision of 100 million Sesterces in State Funds to increase liquidity. This was the equivalent of modern State intervention using State Funds.
  • Nero’s Financial Crises (54-68 CE)
    • There were a series of Financial Crises during Nero’s reign.
    • Nero devalued the Currency, the Silver Denarius by 12% and the Gold Aureus by 6%.
  • Domitian (81-96 CE)
    • In c.81 CE Domitian revalued the Coinage, by increasing the silver in the Denarius from 90% silver to 98%.
    • After 85 CE, Domitian Devalued the Coinage, because of a financial crisis, decreasing the silver in the Denarius to 93.5%.
    • Historians are divided on the result, but generally consider that Domitian tried hard to balance the budget.
  • Trajan (98-117 CE)
    • In 107 CE Trajan devalued the Currency. The silver content of the Denarius was reduced from 93.5% to 89%.
    • Trajan withdrew silver Denarii minted before Nero‘s Devaluation.
    • Trajan then proceeded to mint a greater amount of Denarii than any previous Emperor.
  • Antoninus Pius (138-161 CE)
    • He was obliged to devalue the Currency in 148 CE. he was forced to devalue the silver in the Denarius from 89% to 83.5%.However, he left 2,500,000 Sesterces in the Treasury when he died in 161 CE.
    • Unfortunately, these savings were erased by the Antonine Plague of 165-180 CE, which was devastating in effect and is considered to be the beginning of the Decline and Fall of the Roman Empire.
  • Marcus Aurelius (161-180 CE)
    • In 168 CE he revalued the Denarius, but two years later was forced to devalue it to its previous level in order to pay for the wars.
  • Septimius Severus (193-211 CE)
    • Taxation was increased due to the wars and costs of improving the Legions.
    • The Currency experienced the biggest debasement since Nero (54-68 CE).
    • The Silver in the Denarius was reduced from 81.5% to 78.5%. Then again from 78.5% to 68.5%. And again from 68.5% to 54 %.
  • Caracalla (198-217 CE)
    • He instituted a new currency coin called the Antoninianus, which led to inflation years later, due to hoarding.
  • Severus Alexander (222-235 CE)
  • Crisis of the Third Century (235-284 CE)
    • Inflation in Ancient Rome became a problem during the Crisis of the Third Century.
    • It was caused by the gradual Debasement of the Gold Coin, the Aureus and the Silver Coin, the Denarius.
    • The Roman Government insisted all Taxes be paid in Gold or Silver. However, new Gold and Silver coins were continually bring debased.
    • As a consequence, prices were increased to cover the shortfall and Inflation became a chronic problem.
  • Philip the Arab (244-249 CE)
  • Aurelian (270-275 CE)
    • In 271 CE, Felicissimus was the Rationalis, meaning chief of the state treasury. Aurelian arrested him on charges of stealing the silver during the Minting process. Apparently, it was standard practice for the Mint to debase the coins and steal the silver, and Aurelian intended to change this policy.
    • Felicissimus ordered the Mint workers to rebel, and a serious revolt occurred in Rome. Felicissimus was executed and 7,000 soldiers were killed whilst suppressing the Revolt, according to the Historia Augusta under ‘Aurelianus’.
    • In 271 CE Aurelian increased the weight of the Antoninianus and made it 5% silver. The coins were marked ‘XXI’, meaning 20 Antoniniani were worth 1 silver Denarius.
    • Without the achievements of Aurelian, Diocletian would not have been able to rebuild and consolidate the Roman Empire.
    • Had Aurelian not been assassinated, he might have gone on to rebuild and consolidate the Empire himself.
  • Diocletian (284-305 CE)
    • In 301 CE Diocletian unsuccessfully attempted tried to end Inflation by a freeze on Prices and Wages. He set a maximum price for goods and services known as Diocletian's Price List (301 CE).
    • In 301 CE, Diocletian issued the Edict on Coinage, introducing five new coins, and eliminating the completely worthless Denarius.
    • The Gold Aureus was replaced by the Gold Solidus, worth 1,000 Denarii, but the currency was greatly devalued, which led to galloping inflation, a problem only solved later by Constantine I.
    • Between 30 BCE and 235 CE the Roman Government paid its invoices in gold and silver. During the Crisis of the Third Century, the Government seized what it needed, calling it Requisition, as the value of money could not be determined.
    • Diocletian reformed Requisition into a new Tax system based on Heads (Capita), and Land (Iuga), the assessed value of the land varied according to the crop and type of land. A city in the Empire would send an amount of grain, calculated by its ownership of lands – and an amount of money, men and animals, calculated on its Head count.
    • In 290-291 CE, Italy, which had been Tax exempt, was included for the first time in the Tax system. However, Rome and its surrounding area controlled by the Senators, remained exempt.
    • Inflation was the price to pay for the restoration of the Empire, but the stability Diocletian imposed, meant that the economy was able to return to normal by the time Constantine I came to power.
    • Diocletian is credited with having saved the Roman Empire for another 100 years.
  •  Constantine I (324-337 CE)
    • After 312 CE, Constantine I decided to permanently replace the Aureus with the gold Solidus, which was now worth 275,000 Denarii.
    • Constantine founded the ‘New Rome’, where the city of Byzantium stood. During his reign it was called Constantinople. It became the Capital of the Eastern Roman Empire for the next 1,000 years, long after the western Empire had ended.
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