History of the Economy of Ancient Rome

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Perspective

The history of the economy of ancient Rome begins in the Roman Republic, when it was largely agricultural and based on trading grains, wine, and other commodities. In addition, there were financial markets, established mostly by family wealth, that extended credit for both personal use and public projects. This meant that in times of currency shortfall, Roman officials would often respond by minting money, especially during the hardships created by the First Punic War.

During the early Roman Empire, the economy used money to denominate prices and debts, and a basic banking system was formed. Emperors issued coins stamped with their own likenesses to foster public goodwill and proclaim their wealth and power. But because of the imperial habit of coining money to fund public building works or costly wars, the economy of the Empire was often unstable.

Lacking a central bank, a banker would take deposits and lend money. Since capital usually exceeded loan demand, loans were made on ever-riskier terms. What’s more, Roman senators and other elite were heavily involved in both borrowing and lending, and their personal fortunes formed the basis of their social and political influence.

The Antonine and the Severan emperors debased the coinage in trying to meet military payrolls. This caused high inflation to take hold during the reign of Commodus and erode credit conditions. In the mid-200s, the supply of gold and silver bullion shrank sharply. This was in part because the crises of the third century had disrupted precious metals mining, and gold coinage had been appropriated by invading enemies. As a result, this greatly hampered the money supply and the banks by the year 300. Although Roman coinage had long since become fiat money, general economic troubles worsened under Aurelian as bankers lost confidence in coinage issued by the government. Despite Diocletian’s introduction of a new gold coinage and price controls, the economy of the Empire never regained its former stature.

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