What caused romes economy to weaken how did inflation affect rome?
The decline of the
Roman economy started in what had been called the crisis of the 3rd
century, during which:
a) There were constant
invasions across the frontiers of the empire which massively
overstretched the army.
b) There was
a string of usurpations with as many as 35 usurper emperors and two
part of the empire broke away for a short time.
c) There was runaway
inflation.
Hyperinflation was
caused by many years of debasement of the Roman coins. The silver
and gold content of silver and gold coins had been continually
decreased by many emperors to have more coins to finance their
expenses and to increase the size and the pay of the army. This
devalued the coins. The coins eventually came to have virtually no
value. They had as little as only 5 % of precious metal. This led
to inflation. The usurper emperors made this worse by issuing their
own coins, which increased the supply of money. Inflation became
runaway and went out of control. Its effects were:
1) A breakdown in
trade. It became difficult to exchange goods with a worthless
currency.
2) Agricultural
production on the large landed estates became localised. These
estates decreased their sales of crops to the cities and
concentrated on production for local barter.
3) The urban economy
collapsed. Manufacturing in cities shrunk because their goods,
which were for long-distance trade, could not be traded.
4) Many people migrated
from the cities to the countryside and the population of the cites
shrunk.
5) The owners of the
large estates employed the migrants from the cities as servile
labour. These people lost their rights and became tied to their
landlords.
6) Distresses peasants,
who were leaseholders on the large estates, were leaving their land
in search for better opportunities. They were often turned into
servile labour in the large estates as well.
6) The tax revenue of
the state decreased, while expenditure increased as the size of the
army increased. The mentioned invasions also led to greater
reliance on a much expanded cavalry, which was even more
expensive.
7) Taxation was
increased and was raised in the form of demanding goods, which did
not help the economy. Emperor Diocletian resorted to confiscating
goods. Taxation remained a big burden on the people for the rest of
the history of the empire.
Constantine I managed
to bring inflation under control by scrapping the silver coins and
amassing large quantities of gold to create a viable gold coinage.
However, this benefitted only those who could afford god coins. The
masses had to make do with copper token money (the follis) which
had been created because the previous coins had collapsed. The
follis was very vulnerable to inflation. The overall result of the
crisis was a decline of the economy of the empire which became
fragmented and localised. Trade did not regain its previous levels,
the economy remained less based on money, and the widened gap
between the rich and the poor who had to rely of the vulnerable
follis became irreversible.
