Imperial Monetary Policy and Social Reaction in Third Century Rome

In the third century AD, under the pressure of plagues, external invasion, rising army costs, and usurpation, the Roman emperors incrementally debased the silver coinage that was produced at their imperial mints and incrementally took over civic mints. The debasement, from 2.7 g of silver to 0.04 g of silver in the equivalent of a denarius from 160–274 ad, was accompanied by worries from emperors, mint-workers, and bankers about the value of the currency; however, the total loss of purchasing power of the Roman coinage from the same era was 50–70 %, far less than would be expected from the change in metallic content, if it were the primary source of value. The currency reform of Aurelian in 274 ad, despite raising metallic values of coins, was followed by at least a 90 % reduction in the purchasing power of the silver coinage from 274–301 ad, the year of Diocletian’s Edict on Maximum Prices, showing a paradoxically inverse relationship between metallic value and purchasing power. Based on this quandary, I argue that the Roman silver coinage of the third century CE became a fiat currency in some respects, deriving its guarantee from imperial iconography and assurances rather than from bullion value. The fiat nature of the silver coinage was largely present in usage as a medium of exchange for those without as much long-term interest in maintaining liquid stores of value; this is indicated by the differential debasement of the denarius and aureus; imperial actions and hoarding practices indicate the extent to which the currency was accepted at nominal value. I examine the reactions of different social groups in order to determine the perceived value of the Roman coinage during this time, and in order to understand the paradoxical collapse in the currency’s value in the late third century. To demonstrate this, I will present the applicable elements of the modern concept of “fiat” to this context through portrayal of emperors and usurpers on coins, use coin hoard data to determine the effect of Gresham’s Law, and examine historical and papyrological accounts of currency reforms. I will also use evidence of the expansion of taxes in kind and the rejection of nominal value by both emperor and subjects to argue that the inflation following Aurelian’s reform resulted from an invalidation of the trust in imperial fiat.