Posted Dec 4, 2015 by Martin Armstrong
QUESTION: Mr. Armstrong, I read that the first monetary crisis in Rome took place 218-202 BC claiming the currency collapsed. I never saw you make such a claim so I had to ask if it was true.
ANSWER: No. This was the Second Punic War and was not the result of fiscal mismanagement. Moreover, the Romans used ONLY bronze for their coinage before 280 BC. They began to issue silver in Greek denominations (Didrachm) with the Pyrrhic War (280–275 BC).
This was followed by the First Punic War (264 to 241 BC). It was here that the Roman As fell from about 400 grams to 250 grams in weight. The drastic decline took place during the Second Punic War (218-201 BC) because this is when Hannibal actually invaded Italy itself.
At the beginning of the Second Punic War (218-201 BC), we begin to see gold coined for the first time. This was to impress the other Italian states that they should align with Rome for it was rich and powerful.
As the Second Punic War (218-201 BC) unfolded, we see the cost was great for in 211 BC the Greek didrachm standard (6.92 grams) was reduced and the Roman denarius (4.3 grams) was born as a weight reduction in 211 BC. That was caused by inflation caused by the war effort.
Therefore, yes, war was a driving force behind the monetary system developments. However, to say that the monetary system went into crisis is an exaggeration. It was the cost of war that first necessitated the production of silver coins and then gold. Ultimately, it reshaped the Roman monetary system. These early changes were due to war, not fiscal mismanagement, and cannot be lumped into the same category.
As with all things, relationships change. Here is the silver/gold ratio of the Imperial Era (27 BC to 224 AD). We can see that silver was becoming scarcer with time for that was the mainstay of the Roman monetary system which replaced bronze in the Imperial Period after Augustus became the first Emperor in 27BC.