Crises of the Third Century

March 31, 2013 · by · in Economics, Financial Crises

source: wikipedia

  • The Crisis of the Third Century (also “Military Anarchy” or “Imperial Crisis”) (AD 235–284) was a period in which theRoman Empire nearly collapsed under the combined pressures of invasion, civil war,plague, and economic depression. The Crisis began with theassassination of Emperor Alexander Severus at the hands of his own troops.
  • By 258–260, the Empire split into three competing states: the Gallic Empire, including the Roman provinces of Gaul, Britannia and (briefly) Hispania; the Palmyrene Empire, including the eastern provinces of Syria Palaestina and Aegyptus; and the Italian-centered and independent Roman Empire, proper, between them. Later, Aurelian (270–275) reunited the empire; the Crisis ended with the ascension and reforms of Diocletian in 284.
  • The Crisis resulted in such profound changes in the Empire’s institutions, society, economic life and, eventually, religion, that it is increasingly seen by most historians as defining the transition between the historical periods of classical antiquity and late antiquity.

Economic Impact

  • Internally, the empire faced hyperinflation caused by years of coinage devaluation. This had started earlier under theSeveran emperors who enlarged the army by one quarter[citation needed] and doubled the legionaries’ base pay.

    • As each of the short-lived emperors took power, he needed ways to raise money quickly to pay the military’s “accession bonus” and the easiest way to do so was by simply cutting the silver in coins and adding less valuable metals like bronze or copper.
    • This had the predictable effect of causing runaway inflation, and by the time Diocletian came to power, the old coinage of the Roman Empire had nearly collapsed.
    • Real values continued to be figured in gold coinage, but the silver coin, the denarius, used for 300 years, was gone (1 pound of gold = 40 goldaurei = 1000 denarii = 4000 sestertii).[citation needed] This currency had almost no value by the end of the third century, and trade was carried out by barter[citation needed] — every aspect of the Roman way of life was affected.
  • One of the most profound and lasting effects of the Crisis of the Third Century was the disruption of Rome’s extensive internal trade network.

The historian Henry Moss describes the situation as it stood before the crisis:

Along these roads passed an ever-increasing traffic, not only of troops and officials, but of traders, merchandise and even tourists. An interchange of goods between the various provinces rapidly developed, which soon reached a scale unprecedented in previous history and not repeated until a few centuries ago. Metals mined in the uplands of Western Europe, hides, fleeces, and livestock from the pastoral districts of Britain, Spain, and the shores of the Black Sea, wine and oil from Provence and Aquitaine, timber, pitch and wax from South Russia and northern Anatolia, dried fruitsfrom Syria, marble from the Aegean coasts, and – most important of all – grain from the wheat-growing districts of North Africa, Egypt, and the Danube Valley for the needs of the great cities; all these commodities, under the influence of a highly organized system of transport and marketing, moved freely from one corner of the Empire to the other.[3]

Breakdown of internal trade network

With the onset of the Crisis of the Third Century, however, this vast internal trade network broke down. The widespread civil unrest made it no longer safe for merchants to travel as they once had, and the financial crisis that struck made exchange very difficult with the debased currency. This produced profound changes that, in many ways, would foreshadow the very decentralized economic character of the coming Middle Ages.
  • Large landowners, no longer able to successfully export their crops over long distances, began producing food for subsistence and local barter.
  • Rather than import manufactured goods from the empire’s great urban areas, they began to manufacture many goods locally, often on their own estates, thus beginning the self-sufficient “house economy” that would become commonplace in later centuries, reaching its final form in the Middle Ages’ manorialism.
  • The common free people of the Roman cities, meanwhile, began to move out into the countryside in search of food and better protection.
  • Even the Roman cities themselves began to change in character. The large, open cities of classical antiquity slowly gave way to the smaller, walled cities that were common in the Middle Ages.
  • In spite of extensive reforms by later emperors, the Roman trade network was never able to fully recover to what it had been during the Pax Romana (27 BC – AD 180) of the first century AD.
  • While Imperial revenues fell, Imperial expenses rose sharply. More soldiers, greater proportions of cavalry, and the ruinous expense of walling in cities all added to the toll. Goods and services previously paid for by the government were now demanded in addition to monetary taxes.

Increased localism

The decline in commerce between the Imperial provinces put them on a path towards increased insularity. Large landowners, who had become more self-sufficient, became less mindful of Rome’s central authority, particularly in the Western Empire, and were downright hostile towards its tax collectors.
The Crisis of the Third Century thus marked the beginning of a long gradual process that would transform the ancient world of Classical antiquity into the medieval one of the Early Middle Ages.