Inflation in the Late Roman Empire

One of the most noticeable characteristics of the later Roman Empire was the heavy inflation they faced. For 2 centuries after Augustus became emperor, the Roman Empire was able to maintain two separate currencies: gold and silver. The silver coin, or denarius, was the standard currency. Small change was done in copper or bronze coins, denominations of the denarius, while gold was used for more expensive exchanges.

Revenue for the imperial government was rigid. Much of it came from taxing provinces, which was supplemented by a succession duty for citizens. This annual revenue barely covered expenditures and efforts to systematically increase revenue faced extreme difficulty and backlash. Two common and temporary methods were selling public property and confiscating private property. However, in dire situations, the debasement of currency would be used, meaning that coinage was made less pure in order to mint more. These less pure coins were decreed to have the same face value, allowing the government to pay for wars and other large expenses quickly. At first, the Roman debasement of currency occurred strictly for covering costs during emergencies. The imperial government soon realized, though, that it could obtain more wealth through recklessly debasing coinage, leading to hyperinflation.

The denarius was started by Augustus and originally minted at 84 to the pound, signifying that  84 denarii added to a weight of one pound. The gold coin, or aureus, was also started by Augustus and originally minted about 40 to the pound. By law, 25 denarii were worth 1 aureus. Under Nero, in AD 64, likely to pay for the great fire of Rome, the denarius was reduced to 96 to the pound and the aureus 45 to the pound. Nero also raised the base metal percentage in the denarius by 10%. For the next century and a half, debasement would be relegated to tiny amounts and only when absolutely necessary. However, this would soon change.

As barbarian attacks increased in frequency and the Roman Empire was forced to spend more on the army to protect the empire’s borders, Marcus Aurelius, the famous philosopher-emperor, was forced to debase primarily the denarius to pay for the new expenses. The next few emperors, especially Septimius Severus and Caracalla, did the same. During the rule of Marcus Aurelius, the denarius decreased to 75% silver, and then under Severus to 50%. Caracalla did touch the aureus down to 50 to the pound, but otherwise gold coinage remained about the same. The reason why gold was relatively unaffected was because only denarii were used to pay troops. At this point in time, Roman citizens were well-aware of debasement. Although the denarius was nominally 1/25 of an aureus, a black market in aurei had already developed. The government found it hard to collect gold, as citizens would much rather pay taxes in bad silver. The only standard method the government had of collecting gold was through an “aurum coronarium,” which happened after the accession of an emperor or after military victories. Roman senator and historian Cassius Dio complained that Caracalla would make up victories to levy more auri coronarii. Peoples outside of Roman borders knew this as well; Caracalla was forced to pay treaties to barbarian tribes in gold since they refused to accept debased silver as payment. 

Over the next 50 years, the Antonianus, which had taken over the denarius as the principal silver coin (the denarius remained as a unit of account), went to lower than 5% silver and drastically dropped in weight as well. Gold became increasingly rare and started being converted into plate and jewelry in private hoards, while prices rose as the denarius inflated and silver diluted into tiny amounts across debased coins. During this time, gold became a commodity instead of a currency. In relation to the denarius, gold was skyrocketing by the 320s, reaching an astonishing 100,000 denarii per pound of gold, which then tripled by 324. In 335, 21,000 denarii bought one artaba of wheat, an Egyptian unit. In 338, it rose to 36,000, then 75,000, and finally 500,000. From 324 to 360, the denarius from 4,500 to 30,000,000 for one solidus, the new gold coin. Part of the reason for this rapid inflation was that new denominations of copper currency, which had since replaced actual silver currency, would be introduced in a heavy form, before gradually becoming debased. Every time the new heavy denomination would be introduced, all previous denominations would be set at the same face value, drastically increasing inflation. Another reason for the rapid inflation at this time was that the imperial government would buy solidi from money changers using denarii. Since they wanted to purchase as much gold back from the population as possible, they printed as much denarii as they could while collecting the still pure gold coins. 

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