The Decline and Fall of the Roman Denarius

History repeats itself, so the scholars say.  But according to Mark Twain it just rhymes.  Literary quips and hair-splitting aside, I’ve found that one of the most valuable things anyone can do to advance their knowledge and understanding of the world is the study of history.  Now I’m not talking about the kind of history you get in grade school and university, where all you’re told to do is rote-memorization of people, dates and events.  To get any value whatsoever out of studying history, you have to be able to discern cause and effect.  What causes civilizations to grow to greatness, and what causes them to collapse?

There are few collapsed civilizations that have been studied in quite the depth as the Roman Empire.  Many theories have been offered, some with more merit than others.  Ludwig von Mises argued that Rome was eroded from within and that economics played a huge part in it.  This is too big of a story for me to cover in a single article, so I will focus on one of the most important aspects; the currency.

 Roman Aureus c.193 AD

For hundreds of years, the Romans were on a bimetallic standard, not unlike the currency system of the early United States.  There was a gold coin, the aureus, which was popularized by Julius Caesar.  There was also a silver coin known as the denarius, which was what most Romans used in their day to day transactions.  It was on a solid gold and silver standard that Rome ascended to the height of its development and power.

One of the greatest enemies of mankind is hubris, and the Roman Empire was certainly not immune to this.  The phrase “bread and circuses” refers to the massive welfare spending that occurred in Rome during the height of its power.  With the treasury filled with gold, spendthrift politicians quickly used the money to buy influence, votes and curry favour with neighbouring states.

When Julius Caesar first began minting large quantities of the aureus it was 8 grams of pure gold.  By the second century it had declined to 6.5 grams and at the beginning of the fourth century it was replaced by the 4.5 gram solidus.  The purity of the coin itself was never debased, but the ever decreasing weight was a sure sign that government spending had been outpacing revenues for centuries.

All of this however, pales in comparison with the devaluation of the denarius.  The denarius was the backbone of the Roman economy.  Citizens earning their income in gold were a rarity given that a day’s wage for an average labourer at the time is estimated at a single denarius.  Thus it also became the target of severe abuse by the Roman authorities.

 Roman Denarius c.83 BC

The denarius began as a 4.5 gram silver coin and had stayed that way for centuries under the Roman Republic.  After Rome became an empire, things began to turn sour for the denarius and, by extension, the Roman economy.  Base metals, such as copper were blended in with the silver and so even though the coin itself weighed the same, the amount of silver in it became less and less with each successive emperor.  Throughout the first century the denarius contained over 90% silver but by the end of the second century the silver content had fallen to less than 70%.  A century later there was less than 5% silver in the coin and by 350 AD it was all but worthless, having an exchange rate of 4,600,000 to a gold solidus (or nearly 9 million to the original aureus).

 Silver Content of the Denarius

The economic chaos the hyperinflation of the denarius had on Roman society was very real.  The population of Rome reached a peak of about 1 million inhabitants during the first century BC and maintained that level until nearly the end of the second century.  At this point it began to slowly decline throughout the third century and precipitously throughout the fourth.  By the fifth century, only about 50 thousand people remained.

Now compare the collapse in value of the denarius to some modern-day currencies and see if you notice any similarities:

USD Decline

GBP Decline

CAD Decline

AUD Decline

Further reading in to the events that unfolded in Rome (links below) will reveal that as the denarius was debased, Rome became an economic basket case.  Desperate times called for desperate legislation as the fabric of society was slowly torn apart by inflation.  I urge my fellow readers to gain a firm grasp of these events because they will be instructive as to what we can expect for the future.  The destruction of the Denarius is only one example of currency debasement, of which there are hundreds.  Romans that held on to their gold coins fared well in the hyperinflation and if history is any guide, they will serve us well in the coming years.

Further Reading

Roman Currency of the Principate

Inflation and the Fall of the Roman Empire

How Excessive Government Killed Ancient Rome

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3 Responses to “The Decline and Fall of the Roman Denarius”

  1. Ohhh Henry says:

    The denarius was the model for the medieval penny which was originally a silver coin. Look at the jar sitting on your dresser and you can see the tragic collapse of the Roman being repeated right before your eyes.

    There are lots of good articles and books about the fiscal and governmental madness of the Roman empire, for example there is an article out there about the "Roman New Deal" which describes the Roman attempts to prop up the prices of agricultural produce and I think also the price of real estate, showing how similar they were to the disastrous policies of FDR in the 1930s.

    Lots has also been written about the wage and price controls of Diocletian. Lew Rockwell I think told an anecdote about how Nixon promised him he would never impose wage and price controls because he knew full well the problems of Diocletian. It just goes to show that politicians are not ignorant of history, but rather that once a government exists, there are only so many ways you can point a gun a people's heads in order to rob them, and there are only so many different excuses that can be used in order to delay the inevitable public disenchantment with being robbed. Practically every one of these situations and every single "cover story" was invented long ago in the days of the Romans and the ancient Chinese dynasties. It's no good trying to educate politicians on this history, because they understand history perfectly well. And, once a robber, always a robber. Better to educate the public and inoculate them against the propaganda.

  2. guest says:

    "Antonius heartily agreed with him [sc. Cicero] that the budget should be balanced, that the Treasury should be refilled, that the public debt should be reduced, the arrogance of the generals should be tempered and controlled, that assistance to foreign lands should be curtailed lest Rome become bankrupt, that the mobs should be forced to work and not depend on government for subsistence, and that prudence and frugality should be put into practice as soon as possible." – A Pillar of Iron; this sentence is regularly attributed to Cicero, but it's Caldwell's own, not in Cicero's actual work. It can be found on page 483 of the 1965 edition published by Doubleday (Garden City, NY.)

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