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Ancient Roman Currency and Economy

Ancient Roman currency and economy were pastoral and based on bartering: the Romans were Shepherds and sheep farmers and currency was based on exchange of goods.

As Rome grew it took over the land and commerce of its neighbours. The first instance of this can be seen in the often told "story" dating to the early kingdom. The Romans are said to have needed women to populate the new city and the neighbouring Sabines were an obvious target. The women were taken, a fight ensued and the two sides eventually came to an amicable agreement. It is suggested that in fact this story is a parallel to the Roman theft of the Sabine salt trade along the via Salaria road ("sale" meaning salt). The Salaria road exists to this day.

The wealth of the Etruscans to the north was also due to mercantile trade, primarily mining of metals to be used for the manufacture of weapons as well as agricultural produce. The absorption of the Etruscan lands by Rome meant these sources of natural wealth fell into Roman control. In order to develop these resources the Roman state would give mining licences, for example there was sulphur in Sicily, coal in the north and iron in central Italy. Not to mention the marble in Tuscany.

Throughout the period of growth of the empire the conquest of territories provided the Romans with riches which in turn allowed the removal of direct taxation and to finance the civil wars. Thus while the dominions grew Rome could finance itself, the growth of learning and of organisation and thus lead to further success. All was thus well, or so it seemed. Continued success has its price, as was soon to become evident during the social wars (around 200BC until the murder of Caesar a century and a half later).

Expansion of Roman dominions throughout Italy and across the entire Mediterranean and to the East had put Rome in direct contact with the great centres of thought and art such as Greece. As well as attracting the artists and intellectuals to Rome itself it also meant a concentration of treasures, slave labour and wealth into the city. This lead to the Roman high culture of the Augustan age (just after Caesar, around the year 0). By this period the once austere Romans of Romulus and Remus had become well-to-do citizens: Well off, used to comforts, luxuries and foreign schooling.

Not long before this time the siege of Hannibal had been resisted also thanks to the ability for internal agricultural production. Now, the expansion across the Mediterranean basin meant that Rome had also taken the main grain stores of the then known world. Cheap grain and cereal imports from Africa and Sicily provided an incentive for a shift of home agriculture to sheep and cattle rearing. This meant a reduction in the number of jobs required to run the large farm estates.

Military conquest meant that the economy of Rome depended less and less on internal production and industry but rather on politics and trade around the wealth won in foreign battle.

Wars were financed by the wealthy who would then receive dividends and shares of booty, rather like purchasing stakes in a business venture. Ancient laws meant that the senators and nobility invested into land and agriculture rather than in commerce. This made the ruling classes into extensive landowners. Success in war also meant that the slave trade was huge, for example it wouldn't be unusual for the main slave trade centres to trade ten thousand slaves at a time. The cost of slaves came down heavily to the point where it was cheaper to purchase slaves than to pay free workers a salary. Slaves filled all forms of job in the city, from teaching through to tending shops and small industry.

A consequence of this was that the wealth gap between rich and poor was increasingly wide whilst at the same time it clearly meant increasing mistreatment of the slaves. In the early days, when farms were small and slaves were few, a strong rapport could build up between slave and master. But with the passage of time the master was ever less present in the increasingly large estates which would be run by unscrupulous farm managers who drew every little bit of economic worth from their hoards of slaves. The slaves were treated little better than animals and it is hardly surprising that there was more than one slave revolt. The most significant slave revolts were in 196BC, 186BC and most particularly in 139, the latter being worthy of consideration as an outright war. 70,000 slaves took control of Sicily as well as winning several pitched battles. It took some seven years to re-establish some sort of order. One can imagine what fate the vanquished slaves met.

All these factors meant that the end of the republican period was characterised by social and civil war: the rich were increasingly rich whilst the poor had few very badly paid jobs to aspire to. The only real alternative for the poor was to join the army and hence be paid a wage.

At this point two brothers known as the Gracchi brothers took it in turn to promote a number of social reforms which clearly went down very badly with the conservatives. Amongst these reforms was the right to half price grain as well as some land ownership redistribution in favour of the poor. Not surprisingly the reforms ended up in violence and both brothers were killed. The reforms did however continue to stand and so it is estimated that by the time of the great emperor Augustus as many as 50% of the citizens of Rome were taking advantage of cheap grain (one suspects that many were taking advantage of the system).

First Julius Caesar and then Augustus were great reformers and are not only remembered for their military capability but also for the extensive works they undertook in the public interest. Through great urban development projects they rendered available to the masses much of the wealth which hitherto had been reserved to a few. Augustus was particularly able in the use of "publica magnificentia" to public benefit as well as a vehicle for personal propaganda.

In any case the doom of the empire was already there to be read although it would take several centuries to make itself felt. The economy of Rome depended on success at war and while success kept coming there was little problem but clearly there were physical limitations out there waiting to make themselves felt. The land reforms of the Gracchi, Caesar and Augustus were of limited effect given that a war or year of bad harvest was sufficient to put a small farm out of business and force its sale, usually to one of the larger estates.

The effects of economic swings and booms were to be felt then very much as they are nowadays. A sudden depression in confidence in Rome would have almost immediate effects in the provinces as was witnessed during the reign of Tiberius:

When Augustus had taken over control of Egypt he took the province's immense treasures to Rome and used them to kick-start what was then a stagnating economy (remember Rome was only just past over a hundred years of civil and social war). By the time of Tiberius the economic effects of this were making themselves felt and so the emperor decided to combat the inflationary pressure by withdrawing great volumes of liquidity from the market. Banks by this time were doing flourishing business and had many of the simpler banking tools one might expect today. The sudden lack of funds on the market created a panic and the banks' customers went to withdraw their money. Clearly the banks didn't have the cash to hand and so it was that one after another the banks were shut down. Many couldn't pay their debts off and so bankruptcies followed while usury reared its ugly head again. The effect made itself felt in all banks throughout the empire in an incredibly short time. This was a veritable market crash. Having seen the horrifying effects of deflation Tiberius gave in and quickly opted for a return to inflation. He distributed liquidity back to the banks with strict instructions to distribute the money at 0 percent interest. Capitalism is not so modern huh?

An interesting swing around in agriculture occurred between the reigns of emperors Claudius and Domitian. Protracted periods of peace together with extension of Roman citizenship to other Italic peoples meant that there were fewer slaves available and the cost of labour therefore increased. By this time animal breeds had been improved to the point that there was a situation of overproduction while feed was difficult to come by therefore pushing the costs of rearing cattle up and their value on the market down. Many landowners found it of greater benefit to move back to agriculture and to subdivide their farms to smaller tenancies.

The land tenants were a hardened bunch who knew their job and were eager to maximise the land's yield. Very quickly fertilizers, crop rotation and seed selection made their way in to everyday agriculture. Fruit growers imported and experimented with different varieties of grapes and other fruits such as peaches and figs. The increase in wine production was so great that a law had to be passed to prevent new vineyards from being planted in order to prevent overproduction.

This growth in agriculture brought a growth in small local industry to support it although it wasn't specialised industry as we might expect nowadays but rather provided an access to many different needs on a local scale. Unfortunately the more or less free access to cheap slave labour meant that the Romans never put their genius for engineering to bear on industrial machinery and therefore never managed the leap required for a capitalist styled industrial revolution. Not only were slaves very cheap but machinery would have implied an important loss of jobs and the Romans had already learned that joblessness could create great social stress. In this sense one could say the Roman state was liberal rather than capitalistic or socialist.

At its best the empire could boast many thousands of miles of road right across Europe which allowed hundreds of miles to be covered in a day or two. This had an effect on communications similar to that of mobile phones nowadays. The roads were patrolled and supplied with regular break points for horses, drink, food and in which the night could be spent. The more important mansiones even provided brothels and other amusement for the travellers who stopped there. Dominion of the seas also meant that the longer routes such as between Egypt and India which might once have taken up to six months to navigate could now be navigated in about a single month. As a consequence of this, travel itself became very popular and even the less rich could afford to travel across the seas to places such as Alexandria or Athens very much as tourists did in the 19^th Century "Grand Tour". I suppose that nowadays one might compare this to the Inter-Rail tours of Europe which many students undertake after their university studies.

By the time of emperor Vespasian, who is remembered as being particularly careful with money as well as being the one who began construction of the Colosseum and also introduced public lavatories, the coffers of the Roman state were not exactly overflowing but a steady income was provided by taxes. Later emperors managed to increase state funds but the end was by now on the horizon. Bar a few exceptions the emperors and relative military states from the years 200-300 AD witnessed a period of progressive decadence (and blaming it on Jews and Christians).

Emperor Diocletian had begun a series of much needed reforms to cope with the size and situation of the empire. Unfortunately his new system of rule which amongst other things was aimed at stability of government, was expensive to run as it duplicated bureaucracy and centres of power. This contributed to higher taxation being levied across the Empire with little care for the local levels of wealth. As a result vast agricultural areas, particularly those close to the threatened borders became uneconomical and were progressively abandoned.

Emperor Constantine around the year 300 gave a final twinkle of revival. He undertook some important reforms amongst which was the definitive split of the empire into two. Rome therefore lost much of its former importance to the new capital of the East, Constantinople (later known as Byzantium)

The end of the Roman empire was characterised by a halt of growth in dominions, a fall of population, loss of learning and cultural degradation. In short: economic downfall. Adverse climatic conditions and plagues had pushed the Huns and the famous Attila further and further westward into the lands inhabited by the then "barbarians", leading the latter to seek haven within the Roman controlled lands. The lack of new conquests meant that economic well-fare would depend on internal production which by this time had returned to primarily sheep and cattle farming and wool production.

Furthermore the Roman citizens of the empire had developed a love for the finer things in life such as spices and exotic produce, most if not all of which came from the East. This meant a continuous outflow of wealth towards the East in order to pay for such imports. Unfortunately the produce of the West was of little interest to the East and so led to a gradual impoverishment. This effect did not go unnoticed at the time. As a small example we note that emperor Vespasian, as far back as 70AD, imported and paid state wages to the best tutors which he imported from cities such as Athens, Rhodes and Alexandria in an attempt to stem the outflow of Roman students and their money.

Another factor was that of labour: the Empire had always depended on slave labour as a cheap source of labour to produce wealth. As already mentioned, the final years of the Empire were characterised by a sharp reduction in population, including slaves and this meant that the work force was physically insufficient to run and maintain the social fabric and structure of the state and Rome itself. The cost of labour increased whilst social fabric degraded. It is estimated that whilst at its greatest the population of Rome was in the region of 1.5million by the time of the early middle ages, around 400-600AD the population had reduced to less than 50,000.

An interesting parallel of economic development may be seen in Roman coinage and its changing value through the ages. The size and weight as well as the value of the alloy used to make Roman coins gives us an impression of inflation. Clearly coins can tell us many interesting things from the archeological point of view, for example the look of diverse temples and buildings which are no longer around, but their physical size, weight and material value can tell us much about the available resources in state coffers.

Coins were first minted around the fourth century BC. The smallest of these being the Aes. Through the ages the size, weight and alloy of the Aes progressively worsened. The first true minting of gold coins was about the time of Julius Caesar using the gold he had brought back from Gaul. In fact these coins were minted by Caesar's successor and nephew Octavian, also known as Augustus.

By the fall of the Empire the size and alloy of all types of coins, particularly the silver and gold was so poor that the peoples of various parts of the empire began to refuse to use them as valid currency. Interestingly enough the last series of roman coinage were minted by the barbarian invaders.

Written testimony dating back to around the first century tells us of the price of various everyday consumables. When compared to similar documents written some 150 years later we can see that the increase (inflation) in the cost of common goods such as grain over that period accumulated to somewhere in the region of 500%, or 3% per annum. Not bad all told but one should consider the fact that that the period considered covers a period of growth as well as of decline. There were certainly periods of boom and bust even during the "best" years of the empire as for example in the reign of Tiberius described above.

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"Ancient Roman Currency and Economy" was written by Giovanni Milani-Santarpia for www.mariamilani.com - Rome apartments