Chapter 1 of 8 - How Usury Destroyed the Roman Empire

Explores how usury and monetary policy contributed to the decline of the Roman Empire, highlighting economic and social impacts.

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Key Takeaways

Usury and private control of money undermined the Roman Republic’s economic stability.
State-issued fiat money initially supported prosperity, but was replaced by exploitative silver coinage.
Economic and social inequality fueled unrest and weakened the Republic’s political structure.
Monetary policy shifts, including the gold standard, contributed directly to the empire’s financial decline.
The decline of the common citizen’s role and rise of slavery marked the empire’s societal decay.

What the video covers

The video examines the evolution of Roman monetary systems from barter to copper, silver, and gold coinage.
It discusses the role of usury and private banking privileges in destabilizing the Roman economy.
The transition from state-backed currency to patrician-controlled silver coinage led to economic inequality and inflation.
Expansion of the Roman Republic increased wealth but also social tensions and debt bondage.
The Roman peasants were drafted into the army, leading to agricultural decline and the rise of slave-run latifundia estates.
Social unrest grew due to disenfranchisement, slavery, and economic deprivation, culminating in revolts like Spartacus'.
The Jewish community’s role in money lending and their social status in Rome is briefly covered.
Julius Caesar’s understanding of usury and monetary control is highlighted as a countermeasure to economic instability.
The adoption of the gold standard in 27 BC contributed to financial instability and the empire’s eventual collapse.
By the 4th century AD, wealth concentration, declining fertility, and inadequate money supply worsened social and economic decline.

Chapters

How did usury contribute to the fall of the Roman Empire?

Usury allowed private bankers to control money supply and interest rates, leading to economic inequality, social unrest, and weakening of the Republic's financial stability.

What role did Julius Caesar play in addressing monetary issues?

Caesar recognized money as a national tool and sought to prevent speculation and panics by ensuring money circulation was controlled for the public good.

Why was the adoption of the gold standard significant for Rome?

The gold standard led to financial instability by restricting money supply, causing economic decline and contributing to the empire’s eventual collapse.

Full Transcript — Download SRT & Markdown

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A History of Central Banking and the Enslavement of Mankind Chapter I How Usury Destroyed the Roman Empire. "Money, being naturally barren, to make it breed money is preposterous and a perversion from the end of its institution, which was only to serve the purpose of exchange and not of increase... Men called bankers we shall hate, for they enrich themselves while doing nothing." – Aristotle, Politics.

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The monetary systems of the Roman era (753 BC–565 AD) may be divided into three distinct periods, where units of three different metals were used as the means of exchanging goods and services.

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Although there is evidence of modern human occupation (Homo sapiens sapiens) in the Rome area going back 14,000 years (with Neanderthals having lived there approximately 140,000 years ago), Rome, as a city, is traditionally said to have been founded by Romulus and Remus in 753 BC in a region surrounding the Palatine Hills, also known as Latium.

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According to the legend, Romulus (who killed his brother Remus) became its first king, but later shared the throne with Titus Tatius, the ruler of the Sabines.

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Around 600 BC Latium came under the control of the Etruscans. This lasted until the last king, Tarquin the Proud, was expelled in 509 BC and the Roman Republic was established.

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The Etruscans, a people of Aryan origin, created one of the most advanced civilizations of that period and built roads, temples, and numerous public buildings in Rome.

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The first “money” used in Rome was the cow. This was not true money, but a barter system. Many early peoples used cattle as a medium of exchange.

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According to the legend of Herakles and the Augean stables, the cattle kept there, over 3,000 in number, represented the treasury of King Augeas.

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The Copper Age (753–267 BC). As time went on, the Romans took to using, instead of cattle, irregular lumps of copper or bronze. These lumps were called aes rude (rough metal) and had to be weighed for each transaction.

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There was an increase in trade and Rome became one of the most prosperous cities in the ancient world. This prosperity was based on uncoined copper, later bronze, metal which was measured by weight according to a fixed system of units.

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It was issued by the Roman Treasury in the form of ingots weighing 3½ lbs (1.6 kg) with the full backing of the state and was known as aes signatum (stamped metal), because it was stamped by the government with a cow, eagle, or elephant or other image. Sometimes they were made to resemble a scallop shell.

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In 289 BC these ingots were replaced by discoidal, cast leaded bronze coins aes grave (heavy metal). They represented national money and “were paid into circulation by the state and [each was] only of value inasmuch as the symbols on which its numbers were recorded, were scarce or otherwise.” [1]

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This money was thus based on law rather than the metallic content (although that content was standardized, and the coin did have some intrinsic value, unlike most coins today). This can be considered as an early example of the successful use of fiat money.

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While fiat money is much criticized in some quarters, for example by the followers of Austrian economist Ludwig von Mises [2], there is nothing wrong with it, as long as it is issued by government, not by private bankers, and is carefully protected against counterfeiters.

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Non-fiat money, in contrast, has the serious drawback that whoever sets the prices of gold and silver, i.e., private bankers, can control the nation’s economy.

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Up to 300 BC there was an unsurpassed increase in public and private wealth of the Romans. This may be measured in the gain in land.

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After the conclusion of the Second Latin War in 338 BC and the defeat of the Etruscans, the Roman Republic increased in size from 2,135 square miles (5,525 sq km) to 10,350 square miles (26,805 sq km) or 20% of peninsular Italy.

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In tandem with the expansion of its land area the population rose from about 750,000 to one million with 150,000 persons living in Rome itself.

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A partnership was formed between the Senate and the people known as Senatus Populusque Romanus (SPQR, the Senate and People of Rome). The political leaders were renowned for their frugality and honest virtue.

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The means of exchange was strictly regulated in accordance with the increase in population and trade and there was zero inflation. Debt-bondage nexum, whereby a free man offered his services as security for a loan plus interest, and where in cases of non-payment the debt had to be worked off, was abolished after Plebian agitation by the lex Poetelia[3] in 326 BC.

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The Silver Age (267–27 BC). The traditional money system was destroyed in 267 BC when the patrician elite obtained the privilege to mint silver coinage.

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This change was typified by a patrician who went to the Temple of Juno Moneta (from whence the word money is derived), and converted a sack full of silver denarii to five times its original value by the simple expedient of stamping a new value on the coins. He thus pocketed a very substantial difference in seigniorage for his own private account.

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The early Roman silver coin was known as the drachma and was modeled on a coin used in the Greek South of the peninsula. It was later replaced with the smaller and lighter denarius.

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There was also a half denarius, called the quinarius, and a quarter unit called the sestertius. Still later the system was supplemented with the victoriatus, somewhat lighter than the denarius and probably intended to facilitate trade with Rome’s Greek neighbors.

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There were very few deposits of silver in the Italian peninsula and as a consequence the Roman army had to be expanded, in order to conquer territories to obtain supplies.

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The Roman peasants, who had provided the Republic with food independence, were drafted in increasing numbers into the army.

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Agricultural production, especially corn, declined and the peasant farms were replaced by latifundia, which were large estates worked by slaves. Wheat also had to be imported from North Africa.

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Tensions about granting citizenship and enfranchisement between Rome and her Italic allies resulted in the Social War (90-89 BC). This lack of enfranchisement had led to the fragmentation of Roman society and the alienation of the working-class citizens, who were treated as chattel and who had no responsibilities and therefore no commitment towards the state.

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Until as late as the Second Punic War (218-201 BC), they were not allowed to serve in the army. This is a classic example of a society which had been monetarized. The Republic was weakened and there was increasing despotism.

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Piracy became a major problem, with raids taking place on the coast, villas being sacked, and travelers kidnapped. Violence became endemic and gangsters and terrorists were active in Rome, as there was no police force to maintain law and order. These are inevitable consequences of a society in which money has become the highest ethos.

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There was also political intrigue amongst the elite. Economic deprivation caused discontent amongst the poor, who were increasingly slaves from North Africa, and social unrest.

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This turmoil culminated in the revolt led by Spartacus in 73-71 BC. (The first and second revolts were in 135-132 BC and in 104-100 BC).

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The Jewish Role in the Collapse. The first known Jews who arrived in Rome in 161 BC, were Yehuda and Maccabee. These early Roman Jews employed themselves as craftsmen, peddlers, and shopkeepers. In the last occupation they also indulged in money lending. As a community they lived separately in apartments. They governed themselves according to their own laws and were exempt from military service.

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In 139 BC the Jews, who were not Roman citizens, were expelled by Praetor Hispanus for proselytizing, but they soon returned. In 19 AD by means of a senatus consultum Emperor Tiberius expelled 4,000 Jews, who had been involved in various scandals, but none of these expulsions was properly enforced and their continued presence, in particular as usurers, would play a significant rol

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Julius Caesar Julius Caesar (100-44BC) was born into an aristocratic family on July 12, 100BC.

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He was tall and fair-headed and practised briefly as a lawyer before becoming a brilliant military commander who conquered Gaul (France) in 59-52BC.

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After his defeat of Pompey the Great in 48BC at Pharsalus, Caesar became the undisputed leader of the Roman Republic.

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On his return to Italy in September 45BC, Caesar found the streets and cities crowded with homeless people, who had been forced off the land by usurers and land monopolists.

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300,000 people had to be fed daily at the public granary. Usury was flourishing with disastrous consequences. [4] The principal usurers, many of whom were Jewish, [5] were charging interest rates as high as 48% per annum. As Lucius Annaeus Seneca (4BC-65AD), the philosopher, would later remark in de Superstitione “The customs of that most criminal nation have gained such strength that they have now been received in all lands. The conquered have given laws to the conqueror.”

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At that time there were two main political parties: the Optimates centered around the nobility, the Senate and the privileged few; and the Populares, who represented the citizens. Caesar immediately assumed leadership of the latter.

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Caesar fully understood the evils of usury and how to counter them. “He recognized the profound truth that money is a national agent, created by law for a national purpose, and that no classes of men should withhold it from circulation so as to cause panics, in order that speculators could advance the rates of interest, or could buy up property at ruinous prices after such panic.”[6]

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Caesar introduced the following social reforms: 1. Restoration of property was done at the much lower valuations which held prior to the civil war. (49-45BC). 2. Several remissions of rents were granted. 3. Large numbers of poor citizens and discharged veterans were settled on allotments. 4. Free housing was provided to 80,000 impoverished families. 5. Soldiers’ pay was increased from 123 to 225 denarii. 6. The corn dole was regulated. 7. Provincial communities were enfranchised. 8. Confusion in the calendar was removed by fixing it at 365¼ days from 1 January 44BC.

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His monetary reforms were as follows: 1. State debt levels were immediately reduced by 25%. 2. Control of the mint was transferred from the patricians (usurers) to government. 3. Cheap metal coins were issued as the means of exchange. 4. It was ruled that interest could not be levied at more than 1% per month. 5. It was decreed that interest could not be charged on interest and that the total interest charged could never exceed the capital loaned (in duplum rule). 6. Slavery was abolished as a means of settling debt. 7. Aristocrats were forced to employ their capital and not hoard it.

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These measures enraged the aristocrats and plutocrats whose “livelihood” was now severely restricted. They therefore conspired to murder Caesar, the hero of the people.

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On that fateful morning of 15 March 44BC, only four years after assuming power he arrived at the Senate building unarmed, having dismissed his military guard, who had previously been in constant attendance. Surrounded by 60 conspirators he was stabbed to death and received 23 wounds.

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The Gold Age (27BC–476AD) In 27BC shortly after Caesar’s death (and his deification) the Romans adopted the gold standard, which would have far reaching implications for the financial stability of the empire and lead directly to its demise.

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Previously, during the days of the Roman Republic, gold coins were issued only in times of great need, such as during the Second Punic War or the campaign of Lucius Cornelius Sulla.

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There were few gold mines in Europe, except in remote places like Wales, Transylvania and Spain, and therefore most of the supplies could only be secured from the East. This in turn required a large and expensive army, which became engaged in constant conflict at the empire’s fringes.

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The gold coin was known as an aureus. Also in circulation were the silver denarius and various copper coins: the sestertius, dupondius and the as.

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The scarcity of gold or commodity money frequently induced periods of deflation as a result of the lack of a circulating means of exchange. In 13BC a measure of relief was provided when the weight of the gold aureus was reduced from 122 to 72 grains and this remained the standard weight until 310AD.

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However, metals continued to flow eastwards in order to pay for luxury items, religious dues and usury payments. Furthermore wear and tear resulted in the loss of one third of total coinage in circulation over a 100 year period.

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As gold was treated as a commodity, its debasement was not tolerated. Emperor Constantine (275-337AD) personally ordered death for counterfeiting, and the burning of public minters who committed falsification.

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Money changers, who did not report a counterfeit gold bezant (solidus), were immediately flogged, enslaved and exiled. These regulations were effective for the bezant, which weighed 70 grains and was slightly more than the bezant that was still circulating in 1025AD and weighed 68 grains.

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In 313AD Christianity was tolerated by the Edict of Milan and from 380AD was established as the official religion by Emperor Theodosius I (347-395AD). From this time monetary power resided in the religious authority of the pontifex maximus.

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A feature of the imperial era was social injustice and the undermining of the middle classes through excessive taxation. The Roman businessman was not a trader, but a looter of the provinces, as the homeland had a weak industrial production base, which was incapable of providing the required manufactured goods.

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As the monetarisation of society continued, with the rich parasitising of the common man, the plebians became more like slaves. The abolition of the jury system was symptomatic of the declining respect and importance for the common man in Roman society.

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Role of the Church in the Decline and Fall The tax that Emperor Constantine decreed, viz. that 1/10 of all income had to be tithed to the Christian church, hastened the destruction of the empire.

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Eventually the Church held one third to one half of all lands and accumulated wealth. This concentration of wealth produced a great scarcity of coinage. Money existed, but there was no circulation or distribution of goods and services.

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Instead of recycling the tithed money by means of investment in the community or charitable works such as construction of hospitals, schools and libraries, vast hoards of gold were concentrated behind the 20 foot (6.1m) thick walls of the fortress city of Constantinople and the Vatican fortress in Rome.

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In its last years in the fifth and sixth centuries the Roman Empire had become a parasitic organism, subject to alternating phases of inflation and deflation. Its economic ruination preceded its political ruination. There was no industrial production, almost all food had to be imported and usury was practised on an unprecedented scale.

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The wealth of the empire that was not held by the Church, was controlled by 2,000 Roman families. The rest of the population lived in poverty.

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Consequences The implosion of the western half of the empire in 476AD, after repeated military incursions by the Goths and Vandals, resulted in the Dark Ages.

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A punishing multi-century deflationary depression followed. According to the United States Silver Commission of 1876 the metallic money of the Roman Empire at its height amounted to $1.8 billion, but by the end of the Dark Ages it had shrunk to $200 million.

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Agriculture was reduced to subsistence level. Large sailing vessels vanished as there was no trade. Commerce stagnated. Arts and science were lost and the knowledge of cement-making disappeared.

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Major factors in the decline of the Roman Empire were the concentration of wealth [7], the absence of mining deposits for industrial production, and the vast importation of non-White slaves with the resultant degradation of the genetic value of the nation.

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By the 4th century AD, as a result of the continuing decline in Roman female fertility, slaves outnumbered citizens by five to one. The most important economic reason was an inadequate supply of an inexpensive circulating medium of money and the false notion that money should be a commodity.

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Thus from an economic perspective, the lessons from the fall of Rome are that a dishonest economic system will inevitably contribute to the forces of dissolution. No society can survive a false economic system.

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For any society to function and prosper it is absolutely fundamental that the means of exchange be issued free of debt and interest by the legal authority of the state as representatives of the people in perpetuity.

Topics:Roman Empireusurycentral bankingRoman monetary systemfiat moneysilver coinageeconomic declineJulius Caesargold standardsocial unrest

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