The Roman World
Money and Inflation
The increased use of coinage in Britain from the middle of the third century AD
may have been facilitated, at least partly, by the enormous increase in coin
production that took place during that century and which was accompanied and
made possible by a fall in the silver standard of the coinage itself. For more than
four centuries the coinage system based on the denarius had remained
unchanged, but the amount of silver in the coinage had fallen gradually yet
constantly from the reign of Nero (AD 54-68) onwards, until, by the mid-260s, the
radiate, the coin that had replaced the denarius at double its face value, contained
no more than 2-3 per cent of silver. Under the emperor Tetricus (who ruled in
France and Britain between AD 271 and 274) the radiate reached its lowest
point, with a silver content of no more than 0.5 per cent; as a consequence these
coins were produced in great quantities.
The dramatic debasement of the silver coinage in the third century AD
appears to have been caused largely by the exhaustion of supplies of silver, and
it seems that some of the silver mines in Spain declined after the second
century. However, an exacerbating factor must have been the increasing strain on
the imperial resources caused by the incessant frontier wars, as successive waves
of barbarian peoples attempted to force their way into the prosperous territories
of the empire. A declining stock of silver was therefore forced to go further and
further, as coin output increased. The consequences were debasement of the
coinage and a rise in prices: in short, inflation.
Inflation also meant that low-denomination bronze coins became increasingly
uneconomic to produce, and they ceased to be made during the reign of
Gallienus (AD 253-68), much in the same way as the farthing and the halfpenny
were removed from the British denominational system in the latter half of the
twentieth century. The same process also put an end to the local bronze
coinages of the cities of the eastern part of the empire. Even the gold coinage
was destabilized, being struck on a variable weight standard and in debased
metal. It seems that by this time the old fixed relationship between the silver
and the gold coinages must have broken down.
The problems of inadequate resources and constant warfare affected much
more than the monetary system. Indeed, the whole fabric of the Roman Empire
was almost destroyed. Huge parts of the empire seceded: in the west, Spain,
Gaul and Britain fell under the rule of the separatist 'Romano-Gallic' emperors
for fifteen years, from AD 260 to 274; in the east, all of Syria and Egypt was taken
over by the Palmyrene rulers Odenathus, Vabalathus and Zenobia from AD 261
to 271. The empire was eventually saved by the vigorous emperor Aurelian (AD
270-75), but the inherent problems were greater than one man could manage
effectively. The idea of having a board of co-emperors was formalized by
Diocletian (AD 284-305), who split the empire into eastern and western halves
and established a collegiate system comprising two senior rulers in each part of
the empire and two deputies who would succeed them. This 'tetrarchic' system
did not formally survive Diocletian's abdication, and even though Constantine
the Great (AD 306-37) established himself as the principal ruler of the Roman
world after a long series of civil wars, the principle of having more than one
co-ruler was firmly established and led in AD 395 to the eventual division of the empire into two halves.
It is no coincidence that the two emperors who tried hardest to sort out the
military problems of the empire, Aurelian and Diocletian, also tried to deal with
its money and its administration. Diocletian continued the process of the
reorganization of the provinces which had already begun in the third century, and
both attempted reforms of the coinage. The details are not fully clear to us, but
the decisive change was to free the value of the gold coin from that of the
debased silver coins. At some point in the third century, possibly under
Gallienus or Aurelian, gold coins had ceased to have a fixed relationship with
other denominations and instead came literally to be worth their weight in gold.
We know that this was the case under Diocletian, since his Price Edict
specifically states that the price for gold should be the same whether in coins or
bullion. The 'floating' of the gold coinage was to have far-reaching consequences
for the use of money in the Roman world in that gold coins came to be treated
as bullion. Surviving papyri from fourth-century Egypt show that the value of
gold coins, and hence their relationship with the base-metal coinage, could change from month to month.
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