Roman Republic Experienced Deep Financial Crisis in 90 BC, Study Shows

In the early first century BC, the Roman Republic experienced a multiyear financial crisis, which we can call “Roman inflation.” But while scholars knew that some kind of breakdown in the Roman financial system occurred around 90 BC, they didn’t know all that much about how Rome had responded to the problem. That has now changed, as a new study recently completed by classicist Kevin Butcher from the University of Warwick and archaeologist Matthew Ponting from University of Liverpool in England. The new study, as yet unpublished, according to the University of Warwick press release, helped illuminate the nature and depth of the crisis, which was apparently marked by a high level of Roman inflation in the republic period that continued for a couple of centuries. The Warwick press release on the study reveals a steady trend in Roman inflation that led to crisis after crisis.

Roman inflation in the Republic period was continual over centuries, as the recent study analysis of Republic silver coins has revealed. Until 90 BC silver denarius coins were 100% pure silver, but three years later already included 10 percent copper alloy. (University of Warwick)

How Republic Roman Inflation Changed Coin Content and Prices

To learn more about how the composition of Roman money might have been altered 2,100 years ago, the two professors recruited Dr. Adrian Hillier from the STFC Rutherford Appleton Laboratory in Oxfordshire to perform a detailed metallurgical analysis of ancient Roman denarii (coins) dating to the Roman Republic period. Much to the surprise of everyone involved in this project, it was found that coins that had been made from pure silver before 90 BC contained up to 10 percent copper alloy just three years later.

"The discovery of this significant decrease in the value of the denarius has shed new light on Cicero's hints of a currency crisis in 86 BC,” Professor Butcher explained in a University of Warwick press release discussing the new study. “Historians have long debated what the statesman and scholar meant when he wrote 'the coinage was being tossed around, so that no one was able to know what he had.' (De Officiis, 3:80) and we believe we have now solved this puzzle."

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Presumably, coins that were made from 10 percent copper would have been approximately 10 percent less valuable than coins made only of silver, which translates to a 10 percent Roman inflation rate. People holding older coins made from pure silver would not have been spared any pain, since merchants would have had to raise prices for everyone.

Deflation of the coinage and inflation of prices would have been universal. If everything became 10 percent more expensive between 90 and 86 BC, everyone in the Roman Republic would have experienced a disturbing and anxiety-inducing loss of purchasing power, which would have generated fears that things would keep getting worse.

"The Romans had been used to an extremely fine silver coinage, so they may well have lost confidence in the denarius when it ceased to be pure,” Dr. Ponting stated. “The precise level of debasement might have been less important to contemporaries than the mere realization that the coin was adulterated and no longer made of true 'silver.'”

As we’ve seen during modern inflationary periods, people will blame their political leaders when their money suddenly loses value. Authorities overseeing Roman Republic finance would have been highly motivated to solve their inflation problem as quickly as possible, knowing that the consequences could be dire if they failed to do so.

One of the silver coins from the Roman Republic period that was used to show how Roman inflation increased to the point of societal collapse less than 200 years later. (University of Warwick)

A Crisis Brought on by War

In Cicero’s work, he discusses the actions of one Marius Gratidianus, a politician and administrator who took credit for currency reforms in the 80s BC that apparently ended the financial crisis. Cicero was Gratidianus’ cousin and by all accounts they had a friendly relationship, but he criticized the politician nonetheless for seeking personal glory instead of admitting that Roman leaders had worked together to save the Republic’s endangered financial system.

Like so many other financial calamities in the centuries since, the Roman Republic’s financial crisis was brought on by the high costs of war. Political leaders have long relied on borrowing to fund foreign adventures, and many have struggled to repay their loans after the conflicts have ended.

"In the years after 91 BC the Roman state was in danger of becoming bankrupt,” Professor Butcher explained. “The Romans were at war with their own allies in Italy, and by the conclusion of the war, in 89 BC, there was a debt crisis …by 86 BC there appears to have been a crisis of confidence in the currency, too.”

The latter crisis was brought on by the former. Leaders in the Republic apparently sought to inflate their supply of currency by diluting it with other metals, thereby making it easier to manufacture coins in greater quantities. This would allow them to pay off their war debts more rapidly, as the money they had available to do so would increase. Unfortunately, this would have set off inflation or loss in value of the currency, which would have hit the average Roman hard.

The new research project analyzed a range of Roman coins manufactured during this period and detected a progressive decline in their purity over a four-year period from 91 to 87 BC.

"From being a pure silver coin, the denarius first dropped to under 95 percent fine, and then it fell again to 90 percent, with some coins as low as 86 percent, suggesting a severe currency crisis," Dr. Ponting said.

As Cicero tells it, Roman politicians and administrators collaborated to find a solution to the crisis, as they realized the debasement of their metal currency had started to cause more problems than it solved. Rightly or wrongly, Gratidianus took credit for the solution that was eventually chosen—whatever that might have been.

"One theory is that Gratidianus fixed the exchange rate between the silver denarius and the bronze [the copper alloy added to the coins],” Professor Butcher said. “Another is that he published a method for detecting fake denarii, and so restored faith in the coinage.”

These theories have been around for a long time. But Professor Butcher has proposed a new explanation, based on his and Dr. Ponting’s discovery that after 86 BC, the Romans stopped mixing copper alloy into their silver coins.

"It is all the more noteworthy that around the time Gratidianus published his edict, the standard of fineness rose sharply, reversing the debasement and restoring the denarius to a high-quality currency,” he said. "Although the precise chronology remains uncertain, the new scientific data suggest that [this] could have been the main aim of Gratidianus' edict, rather than something to do with exchange rates between silver and bronze or detecting forgeries."

To understand Roman inflation in 90 BC, consider this chart that shows silver denarius silver content from 64 AD to 260 AD. (Mindomo)

Empires and Republics Come and Go, but Inflation is Here to Stay

This new study reveals just how long societies have been forced to deal with inflation or devaluation of the money supply, and all the problems that causes. Inflation was a problem for the Roman Republic in 90 BC, and it is every bit as big a problem for the world economy today, more than 2,100 years later. Cycles of inflation plague modern capitalist economies, just as they plagued older economies that existed long before the rise of capitalism.

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The current inflationary spiral is somewhat distinct from what was experienced in the Roman Republic, since the present troubles emerged in part as a consequence of a worldwide pandemic. A better comparison for Rome would be what happened in the United States in the early 1970s.

Concern over war debts led to the Roman Republic’s decision to devalue its currency in the early first century BC. More than 2,000 years later the Nixon Administration chose to devalue the US dollar, as a way to help the country more easily pay off debts accrued during the Vietnam War. In the former case it was the strict silver standard for Roman coinage that was abandoned, while in the latter case President Nixon took the dollar off the gold standard. Both devalued the currency and caused inflation yet represented solutions that seemed practical and necessary at the time.

The final truth is that inflationary cycles are an inevitable result of having any type of monetary system, regardless of the time or place in history. Political leaders and economic experts have never figured out how to eliminate the risk of inflation completely, and likely never will.

Top image: Roman inflation from 90 BC onwards eventually brought the Roman Republic to its knees! The Roman Forum, the financial and political center of the city and the Republic would have been a busy place as Roman inflation began to destabilize the entire Roman world. Source: Jebulon / CC0

By Nathan Falde