Ancient and modern: Money games

In the ancient world, the sole sources of wealth were agricultural and mineral (no ‘industry’), and minted coin the sole monetary instrument, whose value was related to its weight and the purity of its metal content (no  paper money). There were no lending banks as we know them, let alone financial mechanisms for raising credit. So are there no lessons we can learn from the ancient world about our current financial plight? Au contraire.

Financial problems were nothing new. Take the second Punic War between Carthage and Rome. By 216 bc, as a result of Hannibal’s ferocious assault on Italy two years earlier, Rome had run out of money. So it borrowed from its own citizens and king Hieron of Syracuse to fund its army, while also doubling its taxes. To increase money supply, the smallest coin, the bronze as, sank from ten oz. in weight (a huge size for the ‘smallest’ coin!) to two.

These were government measures in the face of the direst emergency — the threat to very survival. However, the coinage was largely restabilised when the threats were at an end and remained so, with occasional declines and innovations, for nearly five hundred years. But in the third century ad the real problems began. Civil wars broke out across the empire between generals competing for power; provinces broke away; taxes from the provinces and sources of precious metal both declined. To boost state revenues, Rome started debasing the coinage. By ad 268, silver content in coins had declined to 2 per cent. In the 290s Diocletian re-structured the provincial tax system, vastly increased the state bureaucracy to collect those taxes and doubled troop numbers to stop provincial revolt. It was all too much.