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The Roman Republic was the intelligent
beneficiary of monetary accidents which befell so many of its forebears.
Unquestionably the Romans learnt from the experience of others.
Their money was entirely representative. It
was copper and issued with a face value of about 3 times its commodity value.
It was carefully made using the innovation of striking, rather than casting,
and the dies used were of the highest quality and artistic complexity. They
were extremely difficult to forge and the penalties were heavy.
Furthermore the monopoly on coin fabrication
was jealously guarded by the state, and the extent to which coins remained
overvalued was supported by disciplined fiscal government. The Romans were
probably the first to obey their own monetary laws limiting the supply of
coins.
As a result for 178 years there is no evidence
of demonetisation. On the contrary. As the population and economy increased
the money - strictly limited in supply - increased in value too.
The Romans had come to understand the danger
of monetary over-issuance. An example of nearly contemporary Roman writing on
the subject shows an analysis which Milton Freidman (a famous 20th century
monetarist) would have been hard pressed to better.
"The origin of buying and selling began
with exchange. Anciently money was unknown, and there existed no terms by
which merchandise could be precisely valued, but every one, according to the
wants of the time and circumstances, exchanged things useless to him, against
things which were useful; for it commonly happens that one is in need of what
another has in excess. But, as it seldom coincided in time that what one
possessed the other wanted, or conversely, a device was chosen, whose legal
and permanent value remedied, by its homogeneity, the difficulties of barter.
This device - being officially promulgated - circulated and maintained its
purchasing power not so much from its substance, as from its quantity.
Since that time only one consideration in an exchange was called merchandise,
the other is called price." Julius Paulus
However the result of strict Roman monetary
discipline was a perennial shortage of capital, and a tendency not to put
what there was into economically productive use. By law the patrician class
was prevented from investing in straightforward commercial enterprises, and
instead they were involved in primarily civil projects, which contributed to
the grandeur of Rome. As a result the economy lagged the political and civic
development of the republic, and there were hostilities which broke out
periodically between the patrician and plebeian classes. The Romans
discovered a social side to monetary policy, namely that the inequitable
wealth distribution which arises when money supply is too tight tends to
produce social unrest.
In the end it was not social unrest which
undermined the monetary system of the Roman Republic. It was Hannibal. In the
legendary campaign in which he travelled, with his elephants, from Carthage
in North Africa, through silver rich Spain and across the Alps, he threatened
Rome from the north.
Hannibal took control of the Roman copper
mines in what is now Tuscany in northern Italy, and overran many cities where
the Roman currency circulated. It became valueless under him. Ahead of his
advancing army swathes of the peasant population retreated to Rome itself,
where the Romans were forced to issue underweight and overvalued coinage,
even more so to finance the massive military effort which was required to
repulse the enemy. Even though Hannibal never did take Rome the threat of the
implosion of the Roman state irrevocably undermined the money.
What came out afterwards was a very different
Rome. It was necessarily more militarist, and
expansionist (which it had to be to sustain its militarism) and within 100
years its republican politics had subsided into what was effectively
dictatorship.
Nevertheless the republic's original money
system lasted "for nearly two centuries, during which all that was
admirable of Roman civilisation saw its origin, its growth and its maturity.
When the system fell Rome had lost its liberties. The state was to grow yet
more powerful and dreaded, but that state and its people were no longer
one." Del Mar
Paul Sustain
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