ROMAN EMPIRE INFLATION
Here is what inflation did to the Roman Empire. Roman Empire was one of the most powerful political entities in the world. It was a super-power in terms of its economy, culture and military. The empire at one time covered a surface area equivalent to 5 million square kilometers.
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The Roman Empire made Greek and Latin languages very popular. It also led in promoting culture, religion, inventions, law and philosophy.
Roman Empire was had a population of between 50 – 70 million inhabitants. That was in AD 500. That population represented 20% of the total world population.
Roman Empire was popular and was led by men who were popular globally. One such example is Julius Caesar who ruled as a perpetual dictator.
There were numerous challenges facing the emperor in terms of allocation of power. At one time, Roman Empire was ruled by four emperors ruling at the same time. This situation led to a civil war.
One of the four emperors called Constantine I fought and defeated the other three emperors hence took over the Roman Empire. He moved the headquarters from Rome to Constantinople (a city named after the Emperor himself).
Emperor Constantine I adopted a lot of reforms including introducing Christianity as the official religion of Roman Empire. He also introduced new taxes: a) Tax on estates of senators which was revolutionary because senators were exempted from paying taxes b) taxation on capital of merchants (we are used to capital gains tax). This tax was levied every five years and it had to be paid in gold.
Constantine I ordered that rents paid by tenants occupying imperial estates had to pay in gold. During his reign, he took over the treasuries from the pagan temples. At first he feared that the goods of those temples will be angered by his planned actions. After his Christianity became strong, he got the courage to take gold from the temples.
This is how gold started flowing more freely in the Roman Empire to an extent that it caused inflation.
Further, inflation was caused by high wage bill in the Roman Empire. We will tackle this later after showing you how the empire came to have a large military. Roman Empire was one of the empires which lasted for eternity. In the West, Roman Empire has last for 12 centuries followed by an additional 10 centuries in the East.
The story of inflation starts with some noble advice issued by Emperor Septimius Severus to his two sons: Caracalla and Geta. These are considered his final words to his two heirs. He told them:
“live in harmony; enrich the troops; ignore everyone else.”
Caracalla immediately ignored the first portion of the advice. His first action was to murder his brother. The second portion of the advice he embraced and took it to heart.
This was reflected in the fact that his mother always complained about Caracalla’s actions of spending too much on the military. She asked her son to ensure moderation in such expenditures as well as burdensome new taxes.
The people under the Roman Empire were taxed too much to an extent that there were no additional avenues for taxation (just and unjust). When asked what he could do next, he pointed to his sword and said:
“So long as we have this, we shall not run short of money.”
And:
“Nobody should have any money but I, so that I may bestow it upon the soldiers.”
The Emperor raised the pay for soldiers by 50 percent. He took a very unpopular move by doubling the inheritance taxes paid by Roman citizens.
When he found that this was not enough, he started admitting each and every inhabitant of the empire to become Roman Citizens. This attracted resources for the Roman Empire.
Never take your citizenship for granted. The evil Caracalla did not last long. He was assassinated in 217.
Exit of Caracalla, entry of barrack emperors. This explains why throughout the 3rd Century all Roman Emperors were soldiers. They gained power through military coups.
One of these beneficiaries of coups was Marcus Aurelius who gained power in 180.
In total, there were 26 legitimate emperors in 3rd Century and just one died via natural causes. The others were either assassinated or died during war with other kingdoms they sought to acquire.
During these 50 years, there were numerous invasions and civil wars. As you know war is not good for business. It resulted into general increase in prices by approximately 1,000%.
Inflation has been with mankind for many centuries starting from 3rd Century. Emperor Constantine I introduce the use of gold instead of silver as a legal tender.
In this article, we mentioned that during the Diocletian there were four emperors. This meant there were 4 imperial courts; 4 Praetorian guards; 4 staff and 4 palaces.
In terms of administrative units, the Empire expanded from 20 provinces to 100 provinces. This was for the purpose of maintaining control using the military muscles.
This was one of the causes of inflation. At its worst the soldiers were paid in kind. They were given food, clothing and even housing in liu of pay. The same applied to the rest of the civil service.
There was an interesting class of people in the Roman Empire called decurions. These were successful people who owned land and lived mostly in the cities.
The decurions viewed service to the empire as a great honor. This is why they donated their time and resources to better their urban areas.
Unlike today when we have a special agency for collecting taxes, during the Roman times, the decurions were mandated to collect taxes for the emperor of the day. This was due to the fact that the imperial government was not able to collect taxes efficiently.
The incentives for the decurions to continue collecting taxes was that any uncollected taxes they paid from their pockets. This is what made the decurions to hate the work of tax collection.
To run away from this undesirable mandate the decurions ran away from their cities and urban areas in search of refugee. The imperial government passed new laws which made it possible for the decurions to be arrested when found hiding in areas away from their home cities or urban areas.
After arrest the decurions were returned to their homes where they were assigned their previous duties.
After the rule of Constantine I the prosecution of the church began. Laws were passed which required that if a Christian was arrested and found guilty of believing in Christ they were offered the option of becoming decurions (tax collectors).
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