Joseph R. Peden’s article Inflation and the Fall of the Roman Empire is a fascinating read as it recounts the inflationary policies of Roman emperors over a series of centuries.1 He started this lecture by stating:
I’ve been asked to speak on the theme of Roman history, particularly the problem of inflation and its impact. My analysis is based on the premise that monetary policy cannot be studied, or understood, in isolation from the overall policies of the state. Monetary, fiscal, military, political and economic issues are all very much intertwined. And the reason they are all so intertwined is, in part, due to the fact that the state, any state, normally seeks to monopolize the supply of money within its own territory.
Monetary policy therefore always serves, even if it serves badly, the perceived needs of the rulers of the state. If it also happens to enhance the prosperity and progress of the masses of the people, that is a secondary benefit; but its first aim is to serve the needs of the rulers, not the ruled. And this point is central, I believe, to an understanding of the course of monetary policy in the late Roman Empire.
He then went on to explain some of the various causes of inflation:
What were the causes of this inflation? First of all, war; the soldiers’ pay rose from 225 denarii during the time of Augustus to 300 denarii in the time of Domitian, about a hundred years later. A century after Domitian, in the time of Septimius, it had gone from 300 to 500 denarii; and in the time of Caracalla, about 10 years later, it had gone to 750 denarii. In other words, the cost of the army was also rising in the terms of the coinage; so, as the coinage became more worthless, the cost of the army had to be increased. The advance in the soldier’s pay in the rest of the 3rd century and into the 4th century is not known, we don’t have figures. And one reason is that the soldiers were increasingly paid in terms of requisitions of supplies and goods in kind. They were literally given food, clothing, shelter and other commodities in lieu of pay – and this applied also to the civil service.
When one Roman emperor refused to pay a donative on his accession – this was a bonus given to the soldiers on the accession of the emperor – he was simply murdered by his troops. The Romans had had this kind of problem even in the days of the Republic: if the soldiers don’t get paid they rather resent it. What we find is that the donatives had been given on the accession of a new emperor from the time of Augustus on; then they began to be given in the 3rd century every five years. By the time of Diocletian, donatives were given every year, so that the soldiers’ donatives had in fact become part of their basic salary.
- Mr. Peden was one of the founding figures of the modern libertarian movement. A close confidant of Murray Rothbard and member of his inner circle (the Circle Bastiat), Peden went on to publish the Libertarian Forum from 1969-1982. His writing has appeared in the Libertarian Forum the Journal of Libertarian Studies, and he served on the editorial staff of Literature of Liberty. A Ph. D. in Roman/Christian and Medieval History, Peden studied medieval money and medieval institutions, as well as opposition to government education in US and Europe. He taught European history at Baruch College (City University of New York) for almost 30 years. He died on February 12, 1996.↩
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