Third Century Rome’s inflation crisis: ‘bad’ leaders or plague?

by Edward Pegler on 12 October, 2016

Is the massive inflation seen in the third century Roman Empire a result of reckless spending by megalomaniac emperors, plague or loss of faith? Take your pick. Is late Rome like the modern US? Probably not.

Obama as CaesarThere has been a general (though not universal) assumption in studies of the later Roman Empire that increasing militarisation and reckless spending by emperors was the cause of uncontrolled inflation, leading to the ‘Third Century Crisis’ and, ultimately, the collapse of the Western Roman Empire.

This is, understandably, compared by some US commentators to inflation trends in the last century to show that we’re all going to hell in a hand-cart (or hand-basket, if you like your doom transport small).

While it may be true that we’re all doomed like those old Romans, I want to suggest an alternative mechanism for the late Roman inflation which should show itself in a very similar way in the archaeological and literary record.

This is the effects of two disastrous epidemics on the Empire during the late 2nd and mid 3rd centuries (the Antonine Plague, 165-180AD, and the Cyprian Plague, 251-270AD). I’m not the first to spot this link (Classical Egypt expert Dominic Rathbone has suggested it). However, I do wish that more people gave it a look.

What’s known about late Roman coinage and history

Roman silver debasement graph for 0-270 AD

Chart of the average percentage of silver in Roman silver coinage from 0-270AD. The blue line represents the Denarius and the red line the ‘Double Denarius’ or Antonianus. Also shown are some potentially significant events. Data are based on Butcher & Ponting (see refs).

It’s long been known that from late second century until the late third century something horrible happened to the Roman silver coinage. Initially, the coins started with a silver content of about 75% or more. However, by the end of the period the silver content was about 2% (US small change has shown a more drastic reduction from 90% silver to 0% in an even shorter period). The data available also indicate that between 197 and 235 AD soldiers pay tripled – probably more if supplementary payments are included.

What else is known about the period is that it included phases of protracted civil war, emperors being murdered in rapid succession, the temporary break-up of the empire, two plagues and a fair amount of barbarian invasion. Some kind of order was re-established at the end of the third century AD. However, even with this ‘restoration’ the empire was a changed place, more unfree, more unequal and with rampant inflation (perhaps around 16%) causing the collection of taxes in commodities rather than money.

(This inflation may have been the result of frequently issuing base metal coinage while not withdrawing it from circulation for tax payments, so coin supplies continued to increase… maybe)

The uses of ‘debasement’

debasement of Roman silver coinage from 0-270AD, total silver contents

Chart of the total weight of silver in Roman silver coinage from 0-270AD. The blue line represents the Denarius. The ‘Double Denarius’ or Antonianus has been rescaled: pink represents weight divided by 1.5, red is weight divided by 2 (these are corrections for the possible value of the coin). Data are again based on Butcher & Ponting (see refs).

Kings and ancient governments have frequently tended to run deficits, spending more than their tax or coinage income, and have used methods of precious metal reduction (debasement) of new coin issues to overcome these deficits.

In the case of the Rome Empire the supply of new silver was limited, even with input from new mines. The Empire was probably a net exporter of silver (silver mines are rare in the neighbouring regions) and the money supply, if nothing else, would become worn with use, returning silver to the ground.

Therefore a limited debasement (i.e. reducing the silver content of each coin) allowed not only the maintenance of the currency supply but also the funding of some capital or military projects by emperors. Such practices were seen in medieval and more recent times too. They were not abnormal. They did not cause disasters.

Rome’s first major debasement was in 64 AD (possibly a result of the great fire of Rome, but this is by no means certain). Although there were occasions where the standard was raised again, the genie was out of the bottle. For the next hundred years, despite a constant tendency to try to keep the coins at around 80% silver, the average silver content declined by about 12%. Various academics have estimated annual inflation during this time at about 1% or a bit less (note: this means that there is no linear relationship between debasement and inflation).

During the next one hundred years, from about 170 AD, debasement accelerated. Two bursts of debasement occurred between 180 and 195 AD, and between 245 and 270 AD bringing the silver content down to about 2%. The rate of inflation for this period is estimated to be more than 4% on average – not hyperinflation, but a noticeable increase from what went before.

The conventional view of what caused the problem

At the end of the second century insecure Emperors started to increase soldiers’ pay and the size of the army, as these represented their main source of support. This needed the issue of silver coinage to increase considerably. In order to make this possible, the silver coinage was noticeably debased so that the supplies of silver available would be enough for all the coins.

Depending on whom you read, either the reduction in quality of the coins or the increase in money supply led to inflation (the latter makes more sense to me – see below). Prices increased, leading to further demands from the army for increased pay to compensate for this. This generated a cycle of increased coin issue, further inflation, price increases and demands for more army pay. No doubt taxes and duties on the (non-Italian) population increased as well.

Thus Gresham’s Law took effect. Good quality coinage was hoarded by the richer elements of the population as a store of wealth. As the face value of the coins dropped below the price of silver (both within the empire and internationally) coins were melted down and turned into plate or exported abroad. The quantity of silver in circulation decreased.

The continued increase in coin issue led to further reductions in the amount of silver per coin. Gresham’s Law led to an overall decrease in the supply of silver for the coinage. Both conspired to make the silver content of the coinage smaller and smaller. Either the cheap feel or the abundance of the coinage (perhaps both) led to uncontrolled inflation as citizens lost faith in it.


The problem that I have with this story is why Emperors suddenly decided to increase army pay or the size of the army and why then.

It’s possible that increased frontier attacks requiring a larger army. However, Emperor Marcus Aurelius, the first emperor to experience these increased attacks, managed to overcome a lengthy barbarian assault on the Empire around 166 AD without major debasement (therefore without increasing army pay or, probably, numbers).

Alternatively, it could simply be chance that Emperors felt insecure after the ‘Year of the Five Emperors’ (AD 193). However, the previous period of mess during the ‘Year of the Four Emperors’ (AD 69) didn’t seem to have this kind of effect, so why now?

Lastly, it could be that the silver supply started to dry up. This is a genuine possibility. However, current evidence suggests that new silver supplies were being acquired from the Balkans from Marcus Aurelius’ reign onward, so again…?

Here’s an alternative story.

‘Pandemic’ as the cause

The Antonine Plague lasted between 165 and 180 AD and spread rapidly around the empire. Estimates vary, with a common figure of 20-30% of the Empire’s population dying. The plague of Cyprian, from about 251 to 266 AD, is not so well recorded but its effects may have been similar. Such pandemics tend to recur, dragging population figures down over the space of a hundred years or more.

Reduced populations in the Empire should mean that there’s less of everything. Both supply and demand should decrease so nothing should change. However, this ignores two things. The first is that the amount of coinage and commodities is still the same, so there’s more silver, gold and coinage knocking around per person. The second is that land volume is the same, so the Roman frontier is still as big as it was before and so needs the same number of soldiers to defend it. However, soldiers die in plagues too.

The consequence of a greater money supply means that more people initially can afford to buy existing goods. However, the increased demand but no increase or a decrease in supply means that the price of everything goes up. This is price inflation. For people in a market economy the effect of inflation is to push up wages too. Therefore with time everything should balance.

However, for state employees, in this case mainly the army, wages are regulated and stay low until an emperor decrees a pay rise. This is coupled with a need to employ more soldiers to defend the frontier. Therefore existing disgruntled soldiers need to have their pay increased and new soldiers need to be paid too.

Couple this with the fact that the tax income of the government has gone down as there are fewer citizens and you start to see the problem. The government gets far fewer incoming coins than it sends out. Additionally, Gresham’s Law starts to operate at a low level as coinage with the highest precious metal content is removed from circulation by citizens, reducing the overall quantity of silver in circulating coins by more than the average of all the coinage.

The government is therefore getting much less silver and having to issue far more coins. The only solution is debasement, probably coupled with an increase in taxation and duties.

But as with the conventional view, the issue of more coins inevitably leads to further inflation. Furthermore it causes the worst consequences of Gresham’s Law to operate as the bullion value of old coins becomes greater than their face value, and silver rapidly starts to disappear from the coinage.

So from such an exogenous (external) stimulus as pandemic things could go quite badly wrong. The Roman Empire was hit by not one but two plagues during this time (the Antonine Plague and the Cyprian Plague). The timings of these plagues coincide pretty well, though admittedly not perfectly, with the starts of debasement cycles.

Why didn’t a crisis happen after the Black Death?

There was debasement before during and after the Great Plague or Black Death in all the states and cities of Western Europe. In some places it peaked after the Black Death, for perhaps similar reasons as in the Roman Empire (e.g. Flanders), but not in all. However, there was inflation and, possibly as a result, a silver shortage, in much the same way as in the Roman case.

The important difference is that medieval Europe was not surrounded by a large land frontier to a barbarian world beyond (for Eastern Europe this is not true, and this should be considered in a different post). This meant that an external threat to much of Europe was absent during the population crash of the Black Death.

As for the payment of state armies this was rare. Most soldiers were nobility and their men, or mercenaries who were paid at the market rate. Regardless, even state armies could contract with the contraction of the population without consequence. Any runaway inflation was prevented.

What’s different from the last one hundred years?

So what is the cause of the inflation which has become so noticeable over the last one hundred years? It’s about 3% on average in the US. Also silver has been removed from the coinages of most, if not all, countries. The pattern appears pretty similar to that of the Late Roman Empire, in the US leading all too frequently to ‘that comparison’, particularly by small government, ‘metallist’ advocates.

However, during our inflation the population of the US or Europe has continued to rise, which was not the case for the ‘Third Century Crisis’ on pretty much any measure. Military spending has also been decreasing steadily since WW II. Also, there has been a succession of (largely) democratically elected leaders, almost none of whom have died violently. This is not the same kind of inflation crisis.

Our inflation has in fact been a deliberate and often quite carefully controlled desire of governments in order to grow their economies. Yes, there have been two wars, which did drive inflation (also massively increasing military spending for short periods). Sometimes everything has just gone wrong, such as due to gold withdrawals on people’s trust in the US Dollar in the late 1960s, and during the energy crisis of the 1970s (when the shortage of energy meant that factories couldn’t run to full production, making things expensive and reducing the need for workers).

Importantly, the economy of the US and Europe has grown significantly during this time. The same could not, in any way, be said of the Roman Empire during the 3rd century. It’s a daft comparison, sometimes made by scholars who I think should know better.

Bad Money & Bad Emperors?

What’s amazing about the ‘Third Century Crisis’ is that it did not destroy the Roman Empire. Undoubtedly, there was stupidity, greed and mismanagement, as always. However, quite a few emperors and their governments did their best to guide the empire through an unholy mess. Even Septimius Severus’ supposed dying words to his son (‘… enrich the soldiers and scorn all other men.’) can be seen as simply stating the needs of the situation.

Perhaps the Empire would have been better to simply shrink back to a defensible and economically strong position in the East, as it eventually did at the beginning of the fifth century (i.e. ‘if you lose weight, don’t just hold up your old pants, get smaller pants’). It’s difficult to say. From there maybe it would have eventually been able to reconquer the West as it eventually started to do in the sixth century. But then there was another plague.

As for the money, I’d make a guess that it wasn’t its quality that was the killer. It was its quantity. I can’t prove this, of course. Estimates of the amount of money in circulation in the Roman Empire are virtually non-existent. And that’s the trouble with all of this stuff. With the available data you can argue what you like.

Ho hum.


Bagnall, R.S. 2000 P. Oxy. 4527 and the Antonine Plague in Egypt: death or flight? JRA 13, 288-292

Roger Bagnall, in various essays, strongly makes the case that the effects of plague were relatively small and that institutions were more damaging. It might be worth looking these out for a different view.

Butcher, K. & Ponting, M. 2005 The Roman Denarius under the Julio-Claudian emperors: mints, metallurgy and technology. Oxford Journal of Archaeology 24, 163-197.

Butcher, K. & Ponting, M. 2012 The Denarius in the First Century. In: I. Holmes (ed) XIV International Numismatic Congress Vol 1 Glasgow, Spink, 557-568.

Butcher, K. & Ponting, M. 2012 The Beginning of the End? The Denarius in the Second Century. Numismatic Chronicle 172, 63-83.

These three papers cover, in various formats, new results of changes in silver percentage of the Denarius up to 194 AD. These show the huge potential variation in ‘fineness’ of the coinage, depending on the issuing mint, lax standards of minting, preservation of the coins and their modern cleaning.

Chantrill, C. 2016 US Government Spending website

For info on US military spending.

Chilosi, D. & Volckart, O. 2010 Good or Bad Money? Debasement, Society and the State in the Late
Middle Ages, London School of Economics Working Paper 140/10

Nice graphs of debasements through the Black Death years, showing that many debasements started before the onset of the Black Death in 1348-9 AD.

Coscarelli, J. 2012 New York Post Thought Better of ‘Obama as Caesar’ Cover, New York Magazine

Where I got the Obama pic.

Deaths of Roman Emperors

Nice graph of debasement of silver coinage during Roman era. However, it appears to be based on the data of David Walker, which is now partly superceded or at least requires ammendment. The data used in this post is that of Butcher and Ponting with recommendations for adjusting the data of David Walker.

Coins of Bulgaria

Graph of coin concentrations in Bulgaria during the Roman (and later periods). It would be nice to find a graph that did this for all Empire. Unfortunately, even this graph is only on the internet to show it’s rubbish.

‘Guaporense’ 2011 Graph of Mediterranean shipwrecks and arctic lead pollution for classical period. and Graphs of Mediterranean proxies for population in the classical period (in a comment from the ‘Historum’ forum)

An interesting set of graphs, showing the pattern of Roman enterprise, which is possibly a good proxy for the Roman economy and/or population. The peak of the shipwrecks peaks in the first century AD, earlier than the peak for lead (read silver) mining, which is near the end of the 2nd century AD. There’s a nice late rise into the sixth century too, perhaps before the advent of the Justinian Plague cut short Rome’s resurgence.

Historia The Imperial Roman Economy, Hoarding, Gresham’s Law and All That

A very good overview of Roman coinage, telling the conventional story well without reference to modern politics.

Howgego, C. et al. 2013 Coinage and the Roman Economy in the Antonine Period: the view from Egypt. In: Bowman, A. and Wilson, A. (eds) Mining, Metal Supply and Coinage in the Roman Empire. Oxford Studies on the Roman Economy, 5 . Oxford University Press, Oxford.

An interesting comparison of another coinage within the Roman world, subjected to the same shocks.

Mundell, R. 1998 Uses and Abuses of Gresham’s Law in the History of Money, Columbia University

A very comprehensive and useful explanation of what Gresham’s Law is, explaining how it is often misunderstood.

Pannekeet, C.G.J 201? A theory on how the Denarius disappeared and the debasement of the Antoninianus. (Unpublished?)

Contains Butcher & Ponting’s recommended adjustments to David Walker’s later denarius and antonianus silver content data.

Reece, R. 2007 Coins and the Economy. In: The Later Roman Empire: An Archaeology AD150-600 (2nd ed). Tempus, 129-145.

A good, more ‘metallist’ view of coinage changes in the later Roman Empire.

Speidel, M. A. 1992 Roman Army Pay Scales, Journal of Roman Studies 82, 87-106.

Although not everyone agrees on absolute pay, there is general agreement on the timings of pay rises.

Temin, P. 2011 Price Behaviour in the Roman Empire. From conference ‘Long-Term Quantification in Mediterranean Ancient History’.

This covers many of the arguments in this post, based in part on the ideas of Dominic Rathbone, although I don’t think that he understands why it’s important to maintain an army, which is a significant weakness in his case.

Notes: Gresham’s Law

Gresham’s Law, as carefully stated, says:

When various qualities of currency are recognised as having equal value, better quality currency will disappear from circulation during times of inflation.

(This is normally simply expressed as ‘bad currency drives out the good‘, but this is not really true)

The basic idea behind Gresham’s Law is that in any country or empire there needs to be enough money (or currency) to allow internal trade to continue. If there is a shortage of money (a.k.a. a lack of liquidity), trade slows down, leading to ‘recessions’ or ‘depressions’. This is in fact what much of the advanced world is currently experiencing.

*What I’ve stated here is quite ‘Keynesian’. Many free-market economists would argue that a money shortage is a short term phenomenon and that, given time, the prices of goods will decrease until the existing money supply is sufficient to return the system to normal (note, though, that in the pre-modern world a shortage of hard currency would have made international trade more difficult).

The reverse of this argument is generally not made for inflation, where an increase in money supply is simply seen as a bad thing. It disadvantages creditors and those with capital, and is to the advantage of debtors. However, both Keynesians and free market thinkers would probably agree that uncontrolled inflation is self-sustaining and leads to a lack of trust, as is the point here.

In this circumstance any money, whether it be good or bad quality, private issues, even forgeries, will help to keep trade going. And this is true as long as there’s either a shortage of money or just enough money to keep the wheels of commerce turning.

However, when there’s too much money in the system, inflation kicks in. This results in prices for goods increasing or, to look at it another way, money at its face value having less buying power. Therefore, as people feel slightly cheated by rising prices they tend to hand over only the crappiest coins, holding back the best. In this way the good quality currency tends to drop out of circulation.

In extreme cases, the buying power of currency can fall enough for the ‘intrinsic worth’ of each coin (that is what you could get for the stuff the currency is made of) to become more than the face value of that coin. For good quality coins this happens sooner. At this point, the good quality coins tend to get melted down and the metal in them either turned into jewellery and plate (the best currency during inflation is a hard commodity) or sold abroad. This leaves only the poorer quality coinage in circulation, and the good quality coinage won’t come back easily.

Such is Gresham’s Law. If you didn’t understand that, try Wikipedia.



{ 2 comments… read them below or add one }

Harriet October 12, 2016 at 8:15 pm

We’re told that thick silver coins, sceattas, and silver pennies were produced in Britain a hundred years or so after the Romans had left. Where do you think they got the silver from? Post-Roman Britain is supposed to have been full of conflict and invasions, not that anyone has actually got evidence (assuming you don’t believe in the accounts of Bede and co.)


Edward Pegler October 12, 2016 at 8:55 pm

Dear Harriet. I believe that silver coinage was reintroduced to Britain around 650 AD, about 240 or so years after the disconnection of Roman Britain from the Empire, but the basic idea is right. As for where they got the silver from, it’s a good question. For the rest of the Empire I wouldn’t argue that there was no silver, only that much of it was in the hands of the church or the rich.

As for conflict and invasions in Britain, Bede was doing his best to make sense of the evidence available to him, which presumably was imported books and books that may have survived in less ravaged parts of Britain, as well as legends. There is evidence from archaeology though, and I think that much of southern Britain went through a thoroughly rough time from the mid 5th century for a couple of hundred years. Whatever happened was an implosion reminiscent of the Democratic Republic of Congo, with warlord dominance, even in places not touched by Saxons. During this time there’s a wonderful example of silver plate stashed away at Traprain in southern Scotland. Silver was still in Britain at this time. Some of that may eventually have turned up in later coinage.

best wishes Ned


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