The western Empire was Roman Catholic and spoke Latin. The Eastern Empire spoke Greek and belonged to the Christian church’s Eastern Orthodox branch. The east prospered over time, whereas the west fell. In truth, after the Western Roman Empire fell, the Eastern Roman Empire survived for hundreds of years as the Byzantine Empire. As a result, the “fall of Rome” truly only refers to the fall of the Empire’s western half.
Other fundamental issues also had a role in the decline. A decline in agricultural productivity in the economically troubled west resulted in higher food costs. The empire’s western half had a significant trade deficit with the eastern half. The west bought luxury items from the east but offered little in return. To compensate for the scarcity of money, the government began making additional coins that had less silver. Inflation resulted from this. Finally, piracy and raids by Germanic tribes hindered trade, particularly in the west.
There were also political and military challenges. The fact that political novices were in charge of Rome in the years running up to its fall didn’t help matters. The emperorship was dominated by army generals, and corruption was endemic. The military evolved into a mercenary army with no genuine devotion to Rome throughout time. As money became scarce, the government enlisted Germanic soldiers, who were both cheaper and less reliable, to fight in Roman legions. By the end of the war, these forces were defending Rome from Germanic tribesmen. The sack of Rome was unsurprising in these conditions.
Goth Rockers
Germanic barbarian tribes swept over the Roman Empire in waves. The Visigoths, Vandals, Angles, Saxons, Franks, Ostrogoths, and Lombards all took turns ravaging the Empire, eventually carving apart settlement zones. The Angles and Saxons settled in Britain, while the Franks settled in France.
Romulus, the last of the Roman emperors in the west, was deposed in 476 C.E. by Odoacer, a Germanic commander who became Rome’s first Barbarian ruler. The Roman Empire’s 1000-year reign of terror over Western Europe had come to an end.
What caused the Roman Empire’s inflation?
As the early Roman Empire’s economy flourished, sound fiscal policies implemented by Tiberius (AD 14-37) and other early emperors served to keep inflation in line. With the expansion in trade, the money supply grew in lockstep. Taxes were kept modest as well: each province paid a 1% wealth tax and a flat tax on all people. All of this helped keep costs low and the government running smoothly, but things began to shift towards the end of the second century AD.
The Roman economy took a sharp turn around AD 200, from which it never recovered. There was a recession at the time that destroyed much of the Roman Empire in ways that current researchers are just now beginning to comprehend. The “Antonine disease,” which was brought back from the eastern provinces by Roman soldiers, exacerbated the slump. Since the plague decimated the Roman population, wages climbed at a breakneck pace – far too quickly. The upshot was a massive increase in the price of products that had never been seen in Rome before: inflation was barely 1% in the first two centuries AD, but after the epidemic, prices doubled. The plague’s immediate aftermath should have served as a wake-up call to Roman leaders, but instead, the problems grew worse.
The move to a more cash-based economy was another element that contributed to inflation under the Roman Empire. Prior to AD 200, real estate was a more common form of currency among affluent Romans than coinage, but due to rising government expenses, Rome quickly moved to a more cash-based economy after the epidemic. More people were added to the empire as the empire expanded, and constructions like bridges and aqueducts were needed to keep up with the rising population, which necessitated more money. The Roman military industrial complex grew at an exponential rate, necessitating the use of more coinage to pay the soldiers. Finally, cash was increasingly used for everything from huge commercial transactions by the wealthy to everyday transactions by regular people. With so many coins already in circulation, Roman commanders rapidly discovered that paying for public works projects, much alone their soldiers, was proving problematic. They tried to fix the problem by depreciating their currency.
Despite the fact that the Romans preserved few records directly connected to the devaluation of the denarius, the records they did keep, together with investigations of coins from the time period, tell the narrative of a purposeful attempt to stretch the silver they possessed as far as they could. The Romans began adding impurities to their silver coinage, similar to the situation in Ptolemaic Egypt, in order to increase the number of coins in circulation. The procedure resulted in two outcomes: there were too many coins in circulation, and the new coins were made up of metals other than silver. Between AD 200 and 300, inflation was supposed to have reached an astronomical rate of 15,000 percent! In terms of a concrete example, in AD 301, one Roman pound of gold was worth 72,000 denarii, making it practically impossible for any Roman to carry so many coins on his person. Finally, Emperor Diocletian (r. AD 284-306) realized that harsh measures were required if the Roman economy and possibly Rome itself were to be saved.
By AD 250, the Roman economy had been ravaged by inflation, which threatened to bring the empire down. In 301, Diocletian decided to institute price controls instead than treating the problem at its source by fixing the money crisis. The directive exacerbated the problem by driving buyers to the illegal market, where prices continued to rise. Diocletian’s successors were unable to halt the flood of inflation due to myopia and a lack of understanding of economics, and in fact continued many of Diocletian’s policies, including price controls.
What was the Roman government’s decision-making process?
The early Roman Republic was dominated by the aristocracy (rich class). Aristocrats were known as patricians in Roman society. The Roman Republic was administered by two consuls, or leaders, who held the highest offices in the government. These consuls were chosen by a patrician senate. Lower-class residents, known as plebeians, had almost little say in the government at the period. In the Roman Republic, both men and women were citizens, but only men had the right to vote.
Tradition mandated that patricians and plebeians be kept separate, with marriage between the two classes outright forbidden. The plebeians eventually elected their own representatives, known as tribunes, who were given the power to veto bills enacted by the senate.
The plebeians gradually gained more influence and were eventually able to take the position of consul. Despite these developments, the patricians were still able to buy control and influence over elected officials with their money.
What caused inflation?
- Inflation is the rate at which the price of goods and services in a given economy rises.
- Inflation occurs when prices rise as manufacturing expenses, such as raw materials and wages, rise.
- Inflation can result from an increase in demand for products and services, as people are ready to pay more for them.
- Some businesses benefit from inflation if they are able to charge higher prices for their products as a result of increased demand.
What factors contributed to the Roman Empire’s demise?
Government and economic corruption were at the root of many of the issues that led to Rome’s collapse. Slave labor was the backbone of Rome’s economy. There was a significant disparity between the rich and the poor due to the use of slave labor. The wealthy became wealthy as a result of owning slaves, while the poor struggled to find work. As Rome’s conquests came to an end, so did the inflow of slaves, and the country’s agriculture production suffered as a result. This added to the economy’s already fragile state.
What was the Roman Empire’s approach to inflation?
Throughout reality, in the third century, this was a regular issue in Rome, with all types of people attempting to avoid the extra taxes that the military required. The army had grown in size from Augustus’ time, when it numbered around 250,000 troops, to Diocletian’s time, when it numbered around 600,000. So, during this inflationary spiral, the army had doubled in strength, and this undoubtedly contributed considerably to the inflation.
Furthermore, the state’s administration had developed significantly. Under Augustus, the imperial administration was based in Rome, the governors of various provinces were the secondary level of administration, and the cities were the principal administrative units in the Roman Empire at the time.
This pattern had disintegrated by the time of Diocletian. You had four emperors, which meant four imperial courts, four Praetorian Guards, four palaces, and four staffs, among other things.
Four Praetorian prefectures, regional administrative divisions with their own staffs and budgets, were placed under them. There were 12 dioceses under these four prefectures at the time, each with its own administrative personnel and so forth.
The provinces are under the diocesan rulers, the vicars of the dioceses. There were roughly 20 provinces under Augustus’ reign. There were almost a hundred provinces three hundred years later, despite no significant gain in territory. The Romans simply split and subdivided provinces to maintain internal military control of the various regions. To put it another way, the cost of policing and administering the Roman state grew exponentially.
All of these costs, then, are some of the reasons for inflation; I’ll get to the rest later. To give you an understanding of the situation after Constantine’s gold reform, let me simply give you some statistics for how much a pound of gold cost in terms of the denarius, the silver coinage, or token coinage now.
In Diocletian’s period, in the year 301, he set the price for one pound of gold at 50,000 denarii. It had swelled to 120,000 people ten years later. It was now 300,000 in 324, 23 years after it was 50,000. A pound of gold was worth 20,000,000 denarii in 337, the year of Constantine’s death.
By the way, just as we are all familiar with the larger stamp on German currency from the 1920s, the Roman coinage includes stamps above stamps on the metal, denoting multiples of value.
One of the Roman emperors had a brilliant idea at one point: instead of creating coins, he created a mechanism to deal with inflation. People began passing these pouches back and forth as currency after he inserted brass slugs in a leather pouch and called it a follis. I suppose that was the Roman counterpart of the paper baskets seen in photos of Germany in the 1920s.
Surprisingly, within ten years or so of that beginning, the word follis which had previously signified a sack of coins had come to mean merely one of those metal slugs. The follis was now one of those snails. They couldn’t even keep the bags in place because they were inflated as well.
Now, despite all of this inflation or perhaps we should say, because of all of this inflation historians of prices in the Roman Empire have arrived to the conclusion that the price of gold, in terms of its purchasing power, remained consistent from the first to the fourth centuries. In other words, gold’s purchasing power stayed unchanged, and all other forms of currency just became progressively worthless.
What were the factors that led to this inflation? First and foremost, there is conflict. The soldiers’ salary increased from 225 denarii during Augustus’ reign to 300 denarii during Domitian’s reign, a hundred years later. It went from 300 to 500 denarii a century after Domitian, during the reign of Septimius, and then to 750 denarii during the reign of Caracalla, around 10 years later. In other words, the army’s cost was rising in terms of coinage, and as the coinage became less valuable, the army’s cost had to rise as well.
We don’t know how much soldiers’ pay increased in the rest of the 3rd century and into the 4th century; we don’t have any numbers. One reason for this is that soldiers were increasingly paid in terms of supply requisitions and in-kind products. In place of payment, they were provided food, clothing, shelter, and other necessities. This was also true in the civil service.
When a Roman emperor declined to pay a donative on his accession a bonus granted to soldiers upon the emperor’s accession his troops just murdered him. Even in the days of the Republic, the Romans faced this problem: if the troops are not paid, they become enraged.
From the reign of Augustus forward, the donatives had been given on the accession of a new emperor. They were first distributed every five years in the third century. Donatives were granted every year by the time of Diocletian, and the soldiers’ donatives had effectively constituted part of their basic pay.
As I previously stated, the army’s size has grown as well. From Augustus to Diocletian, it had more than doubled. In addition, the civil service grew in size. All of these events pushed the state’s monetary resources beyond its ability to support itself, and the ship of state was kept afloat by debasing, taxing, and, finally, accusing people of treason and taking their properties.
Quizlet: What Caused Inflation in the Roman Empire?
Why did Rome have inflation? People paid less in taxes as a result of the weak economy. Because the Roman government had the same expenses, it began to put less gold in its coins in order to pay the soldiers. When individuals discovered that the coins had less gold, their value plummeted.
Why did Rome’s administration succeed so well?
By the first century BCE, Rome had risen to become the world’s most powerful state, thanks to a combination of military might, political flexibility, economic expansion, and more than a little luck.
What are the three most common reasons for inflation?
Demand-pull inflation, cost-push inflation, and built-in inflation are the three basic sources of inflation. Demand-pull inflation occurs when there are insufficient items or services to meet demand, leading prices to rise.
On the other side, cost-push inflation happens when the cost of producing goods and services rises, causing businesses to raise their prices.
Finally, workers want greater pay to keep up with increased living costs, which leads to built-in inflation, often known as a “wage-price spiral.” As a result, businesses raise their prices to cover rising wage expenses, resulting in a self-reinforcing cycle of wage and price increases.
What is the impact of government expenditure on inflation?
We observed essentially little influence of government expenditure on inflation across the board. For example, we discovered that a 10% increase in government spending resulted in an 8 basis point decrease in inflation in our benchmark specification. Furthermore, the effect is not statistically significant.
Does this mean that countercyclical government expenditure is inefficient at boosting output on its own? Certainly not. Our paper simply shows that the inflation channel of government spending is not an empirically significant mechanism for government expenditure to effect the economy.
What are the five factors that contribute to inflation?
Inflation is a significant factor in the economy that affects everyone’s finances. Here’s an in-depth look at the five primary reasons of this economic phenomenon so you can comprehend it better.
Growing Economy
Unemployment falls and salaries normally rise in a developing or expanding economy. As a result, more people have more money in their pockets, which they are ready to spend on both luxuries and necessities. This increased demand allows suppliers to raise prices, which leads to more jobs, which leads to more money in circulation, and so on.
In this setting, inflation is viewed as beneficial. The Federal Reserve does, in fact, favor inflation since it is a sign of a healthy economy. The Fed, on the other hand, wants only a small amount of inflation, aiming for a core inflation rate of 2% annually. Many economists concur, estimating yearly inflation to be between 2% and 3%, as measured by the consumer price index. They consider this a good increase as long as it does not significantly surpass the economy’s growth as measured by GDP (GDP).
Demand-pull inflation is defined as a rise in consumer expenditure and demand as a result of an expanding economy.
Expansion of the Money Supply
Demand-pull inflation can also be fueled by a larger money supply. This occurs when the Fed issues money at a faster rate than the economy’s growth rate. Demand rises as more money circulates, and prices rise in response.
Another way to look at it is as follows: Consider a web-based auction. The bigger the number of bids (or the amount of money invested in an object), the higher the price. Remember that money is worth whatever we consider important enough to swap it for.
Government Regulation
The government has the power to enact new regulations or tariffs that make it more expensive for businesses to manufacture or import goods. They pass on the additional costs to customers in the form of higher prices. Cost-push inflation arises as a result of this.
Managing the National Debt
When the national debt becomes unmanageable, the government has two options. One option is to increase taxes in order to make debt payments. If corporation taxes are raised, companies will most likely pass the cost on to consumers in the form of increased pricing. This is a different type of cost-push inflation situation.
The government’s second alternative is to print more money, of course. As previously stated, this can lead to demand-pull inflation. As a result, if the government applies both techniques to address the national debt, demand-pull and cost-push inflation may be affected.
Exchange Rate Changes
When the US dollar’s value falls in relation to other currencies, it loses purchasing power. In other words, imported goods which account for the vast bulk of consumer goods purchased in the United States become more expensive to purchase. Their price rises. The resulting inflation is known as cost-push inflation.