The Fall of Rome?
From one point of view, the Roman Empire never "fell." (Hilaire Belloc, "What Was the Roman Empire?" Europe and the Faith, Rockford, Illinois: Tan Books and Publishers, Inc., 1992, 18.) True, the "last" emperor, Romulus Augustus, abdicated in 476, but he was instantly replaced by a more effective ruler who called himself a king instead of an emperor. There was a change in terminology, not function. Odoacer was a Roman general, holding a regular Roman commission and proclaimed Imperator by his troops — worthy to lead Romans in battle. The word itself, from which we derive "Emperor," signifies "Commander in Chief." Odoacer was thus an Imperator, but not the Imperator. Odoacer had no thought of putting an end to the Empire. Like many other Roman military leaders, he was taking a time-honored approach to power. This had happened before, and, as far as the principals were concerned, would happen again.
What, then, was the Roman Empire? One historian defines it very simply and clearly: "The Roman Empire was a united civilization, the prime characteristic of which was the acceptation, absolute and unconditional, of one common mode of life by all those who dwelt within its boundaries." (Ibid., 22.) That is, the Roman Empire was a specific set of institutions adapted by the wants and needs of the people living there. As long as those institutions remained responsive to those needs and wants and in general conformity with the precepts of the natural law, the civilization endured. It was not perfect, but then, few human artifacts are. Unlike Alexander's construct, which failed to adapt at all, the Roman Empire exhibited a high degree of adaptability, lasting in one form or another for more than 2,500 years. Perhaps not surprisingly, one of the most enduring institutions of the Romans (next to law, language, and the written word) was the monetary system.
The Empire didn't fall. It faded, but never completely disappeared. In regions where direct Imperial power waned, the local military administration took over the reins of government, but always in the name of the Empire. Gradually the chief administrator and wielder of supreme local civil and military power came to be known as a rex, a recognized administrative function in Republican and Imperial times. There were religious varieties of rex as well as civil. Sometimes the offices were combined for ritual purposes, as in Athens, but that is another issue. This word, rex, which is usually translated into English as "king," did not, at first, have the status or mythology that we now associate with monarchy. A king in Greek, Roman Republican and, later, Roman Imperial times was not a monarch, a sole-ruler. He was an elected or appointed head of a people or political subdivision, often for life, but not infrequently for a limited term.
The idea of Empire remained. Local rulers, whether calling themselves Rex, Duces Bellorum ("Duke"), or any of a multitude of ranks and titles, invariably claimed to be a part of an Empire that many modern historians assert did not even exist. (Ibid., 77-79.) One of the premier classical historians at the turn of the last century, J. B. Bury, supports the view that the Empire didn't fall. Some modern historians, however, still have the habit of accepting Gibbon uncritically, even though many have accepted the thesis that the empire was transformed, not conquered. The administrative center had shifted to Byzantium following the centuries when Constantine had moved the imperial capital from Rome to the Golden Horn, but that single society remained.
There had never been an official uniform coinage adopted for the entire Roman Empire. Many places used the imperial Denarii, but frequently this was alongside of, and not a replacement for, the local coinage. Most client nations and a great number of subject peoples in the eastern part of the Empire were granted the mint right under the Romans. They, of course, retained their local standards.
This was reflective of the great plurality that overlay the unity of the World-State that was Rome. There were innumerable local customs and liberties — coinage being one — philosophic opinions, religious practices and dialects. There was not even one official language, but two — Greek and Latin, side by side. Still, however, there was that basic unity of system, even when four or more men held power at the same time. (Ibid., 24-25.)
As the power and cohesiveness of the Western Empire waned, whatever remained of a need for coinage was filled locally, either through domestic issues of usually degenerate products, or importation of foreign coin. By the time the Domus Regiæ Maior (the "Mayor of the Palace"), Pepin the Short, seized the Frankish throne in 754 from Childeric III, the last of the Merovingians, coinage and the monetary system in the German states and everywhere else in the West was in a truly deplorable state.
The monetary system had broken down as the imperial administration of the Roman Empire in the West fell apart. By the fourth century, coinage had, "fallen to the degraded position of ponderata (i.e., miscellaneous pieces of metal of no standard weight or fineness), when it was customary to assay and weigh each piece. Before the seventh century the weights themselves had been so frequently degraded that it was no longer possible to make a specific bargain for money." (Alexander Del Mar, Money and Civilization, London, 1886, 5.) The Lex Salica, the law code of the Merovingians, however, continued to denominate fines in terms of Solidi and Denarii. (Vide Katherine Fischer Drew, The Laws of the Salian Franks. Philadelphia, Pennsylvania: University of Pennsylvania Press, 1991.)
Barter and payment in kind were the order of the day. Tenants and Knights' fees were, of course, paid in military service. Rents of common people, such as socmen and tenants of demesnes lands, were usually paid with labor or foodstuffs. Every commodity imaginable was used in trade, and often specified in contracts instead of coin or money of account. It was all, however, money, as it was all used as the medium of exchange in settlement of a debt.
There was also the prevalence of what people in the Middle Ages called, "living money." This consisted of cattle of all kinds (draft animals of whatever species were referred to, until recently, generically as "cattle") and slaves. All of these had a value set upon them by law. An adult male slave and a hawk, for instance, had the same value in certain areas. Whether this was a compliment to the man or the bird is uncertain. When a debtor could not make up a necessary sum in coin, he frequently supplied the deficiency by providing a certain number of slaves, horses, cows, or sheep. All private and public debts, as well as fines and imposts by the State and penances imposed by the Church were payable in "dead" or "living" money, with the exception that the Church, attempting to discourage slavery, refused to accept slaves in settlement of a debt or penance. (Robert Henry, History of Great Britain, 1848, Vol. IV, 243.)
Pepin took characteristically vigorous action, and in 755 introduced a reformed coinage of good quality "Deniers" (from the Latin). This Novus ("new penny") was of sterling (.925) silver, and had a precious metal weight of 21.818 grains. The planchet was much broader and thinner than the old Sceat, making for a much more attractive coin. The standard was 264 Deniers to the twelve-ounce Roman pound of silver (5760 grains). Hence the pound (Librum, Livre, Lira, etc.) quickly became a unit of account throughout Europe. This was the reformed coinage introduced into England, probably by Offa of Mercia around 775, at a slightly reduced weight of 20 grains (although later increased to the standard pennyweight of 24 grains), and was tenacious enough to survive, at least vestigially, until 1970.
The new coinage, however, was initially restricted to the kingdom of the Franks. It was through the efforts of one of Pepin's sons and co-heirs, Charles, known to history as Charlemagne, that the Frankish Denier and coins minted to its standard became the common currency of Europe. Pepin originally split the kingdom between Charles and Carloman, his elder son (Einhard, Vita Caroli, Two Lives of Charlemagne, London: Penguin Books, 1969, § 3). Charlemagne subdivided the Roman pound of silver into twenty Sols (Solidi) of twelve Deniers each. The Denier was further divided into two Oboles, each weighing 12 grains of silver. The Denier quickly became the standard coin of Western Europe, as well as the Empire, with, naturally enough, many variations of type and legend. Until the middle of the thirteenth century it was the only coin issued in Europe in any quantity. (C. C. Chamberlain and Fred Reinfeld, "Denier," Coin Dictionary and Guide, New York: Bonanza Books, 1960.)
Pepin had originally set the standard at 264 Deniers to the pound. Charlemagne, in an effort to stabilize the gold to silver ratio, increased the silver content to 240 to the pound, or 24 grains (one Pennyweight) to the Denier. (Carlile, op. cit., 87-88.) Even though gold did not generally circulate, it was still considered an important national asset, and one that should not flow out of the country. Edicts by Charlemagne's successors make it clear that this was, indeed, an object of national policy. (Ibid., 88-90.) The entire monetary system was ultimately based on the Solidus, (A. R. Burns, Money and Monetary Policy in Early Times, New York: Augustus M. Kelley, Publishers, 1965, 243.) and it was an important sign of continuation with the old Empire and a symbol of the underlying social unity.
Charlemagne issued a very limited number of gold Solidi at his mint at Uzés in Provence. His successor, Louis le Debonnaire, also struck Solidi at the imperial capital at Aachen. These were to be the last gold coins struck in continental Europe until Friedrich II (1197-1250) issued his gold Augustale in 1230, four centuries later. Carolingian gold coins are thus extremely rare and out of the reach of most collectors.
Except for the limited issues of gold Solidi, probably issued for symbolic purposes to show continuity with the classical standard, silver Deniers and Oboles were virtually the only coins struck by the Carolingians. The designs are extremely simple. The obverse is usually devoted to a single central cross, surrounded with the king's name. The reverse is almost exactly the same, except that, instead of the king's name, the cross is surrounded by the name of the mint town, e.g., METALLVM (Melle). (Laurence Brown, Coins through the Ages, New York: Bonanza Books, 1961, 42.)
Spread of Reform
Charlemagne's coinage reform did not reach to all parts of his Empire. Outlying areas often retained vestiges of the ancient Roman or Merovingian system, or adapted one derived from whichever major economic power within whose sphere they operated. In most of Spain, for example, no one reckoned in Libræ, Solidi and Denarii, even as money of account. Other parts of Spain did adopt the standard, referring to it as "Denor," from which the modern Spanish dinero, "money," is derived. Some of the Spanish recalcitrance was due to the fact that the Spanish largely refused to acknowledge that they were even in the Frankish sphere of influence, much less part of the revived Empire. As far as the Spanish were concerned, they were still in the old Empire, even if there wasn't an emperor. In Castile, the gold Solidus or Bezant of Constantine, the standard coin of the East, was current money until 1487. Other areas used Moorish standards.
Charlemagne's sole excursion into the Iberian peninsula accomplished little apart from providing the material for the epic Chanson Rolande, based on the destruction of the army's baggage train by Basque tribesmen as Charlemagne was withdrawing back into France. There are two contemporary reminders of this battle. One is Einhard's account in his Life of Charlemagne, where he says, "In this battle Egginhard the Royal Seneschal, Anselm the Count of the Palace, and Hruodland ("Roland"), the Warden of the Breton Marches, were killed, along with many others." (Einhard, op. cit., § 9.) The other is a unique Denier of the reformed coinage, well worn, but with the obverse clearly stamped, "CARLVS," and the reverse, "RODLAN." (W. S. Merwin, "Introduction," The Song of Roland; Medieval Epics, New York: Modern Library, 1963, 90.)
Giving support to the theory that inventions and new institutions come along as needed, and not before, the demand for coinage in the Europe before Charlemagne's renaissance was limited. Trade was not very extensive, and the majority of transactions were carried out on the barter basis. Accounts in the various chronicles that mention coins limit their use to awards of honor given out by local chieftains and kings, usually by the bag or handful. By far the greater use of coinage seemed to be as hoard material, such as comprised at least some part of the great legendary treasure accumulated by the Nibelungs and sunk in the Rhine (a primary inspiration for Wagner's operatic "Ring Cycle"). (Der Nibelungenlied, verse XIX in, e.g., Medieval Epics, op. cit., 320-324.)
This changed as Charlemagne's reforms took hold. As trade became more than a local matter, the need arose for a uniform unit of exchange and a standard of value recognized throughout the Empire. This created the need for a widespread coinage in silver. The change from gold to silver in this instance argues in favor of a developing money economy. Noting the place that coinage held in the typical pre-Carolingian economy and the prevalence of barter for day-to-day transactions, providing small denomination currency would, as Alexander Hamilton maintained later for the United States, spur economic development and provide ordinary people with the means of participating in the economic life of the nation. The theory behind the presumption that economic advances result in a bronze-to-silver-to-gold-to-paper shift assumes an adequate existing supply of the "lower" currency to supplement the "higher" for day-to-day transactions.
This was not the case in Charlemagne's reborn Empire. The need was to rebuild institutions, rather than to elaborate an existing system. It is also important to recall that a Denier was not a particularly small denomination. It was for many centuries a standard day's wage for a laborer, and a generous one, at that. Before the silver strikes in the Tyrol in the late 15th century and the flood of gold and silver from the New World in the sixteenth, both silver and gold were far more highly valued than in later centuries. Charlemagne's reforms simply made it possible for ordinary people to gain access to the institution of coinage for everyday, or at least not extraordinary, use.
Money in All Its Forms
Even with the reform of the coinage, however, an air of barter and the tendency to value items in terms of commodities persisted. For example, Charlemagne, in his dealings with the Saxon tribes, defined the value of his Solidus as the value of an ox of a year old of either sex in the autumn season, just as it is sent to the stall. (Burns, op. cit., 12n.) This was yet one more example of the prevalence of the idea of valuing things in terms of cattle in pastoral economies, from ancient Rome and medieval Ireland, to modern Maasailand.
Charlemagne's reforms were not limited to economics. The illiterate emperor's love of learning is legendary. His untiring efforts to learn to read and write could serve as an inspiration to many. He even slept with his writing-tablets and notebooks under his pillow in order to practice at odd hours. (Einhard, op. cit., § 25.) He imported scholars from Ireland, (Notker the Stammerer, De Carolo Magno (in Two Lives of Charlemagne, London: Penguin Books, 1969), § 1.) then the center of learning for the known world, (Vide, e.g., Thomas Cahill, How the Irish Saved Civilization, New York: Doubleday, 1995.) One contemporary source reports seeing more than twenty ships loaded with students from all over Europe sailing up the Shannon on a single day to study at the great monastic centers of Ireland.) and gathered books and manuscripts wherever he could find them. These were re-copied in the new "Carolingian Hand," heavily influenced by the insular Irish semi-uncial script then prevalent throughout Ireland, Britain behind the Saxon Shore, and Scotland. This was a vast improvement over the older crabbed and crowded style that is nearly illegible.
Being human, Charlemagne made errors, but, for a ruler, remarkably few, even considering the society and culture within which he was raised. The already-noted fiasco in Spain was one of the more obvious, consisting of an attempt to help people who didn't particularly want his help, and extend his rule even further. The other blot on his record, barely excused even by his otherwise adulatory chronicler Einhard, (Einhard, op. cit., §§ 7-8.) was the thirty-three year war and forced conversion of the Saxon tribes. From the point of view of modern-day realpolitik, the Emperor had no choice about leaving an immense hostile force on his borders, but it contrasted sharply with his otherwise exemplary treatment of foreign nationals and peoples.
Charlemagne established and maintained relations with the Caliph of Baghdad, Haroun al Raschid of Arabian Nights fame. The Caliph sent Charlemagne the first elephant seen north of the Pyrenees since Hannibal's invasion (and probably the first Indian elephant in Europe) as a gift to show his esteem for this great restorer of empire and stability, and also support Charlemagne against the Byzantine Emperor. Relations with Constantinople were strained, especially since Charlemagne laid claim to an imperium that the Eastern Emperors naturally thought of as belonging to Byzantium (although unable to exercise it).
Modern historians commonly deride Charlemagne's efforts to breath life into the Empire and reestablish and reform the institutions of society. They claim that the effort failed within a few generations of his death. This ignores the fact that the socio-political entity known as the Holy Roman Empire persisted, in name at least, until abolished by Napoleon in 1804. The last remnant fell in 1918 when the Allies, contrary to the spirit and implications of the Armistice, dismembered what remained of the Austro-Hungarian Empire.
That, however, still falls into the trap that so many do, defining Charlemagne's achievements in modern terms. Did Charlemagne accomplish what he set out to do? That is, did he revive a united civilization, the prime characteristic of which was the acceptance of a common mode of life by all who dwelt within its boundaries — and did he achieve a common currency?
Yes. Charlemagne's effort lasted until the rise of nationalism, and in a modified form thereafter. The reformed currency he established lasted with modifications until 1792 in Western Europe, 1871 in Middle Europe, and 1970 in Britain. When we consider the push that led to the European Union, the idea of an empire in the sense that Charlemagne understood still animates people today. You can't call the European Union Roman (although most of the countries are firmly established on Roman institutions and language), it certainly isn't holy, but it does meet the definition of what Charlemagne would have called an empire. By that measure, the Roman Empire was restored by Charlemagne and has lasted to the present day.
The Carolingian experience illustrates how far a civilization can advance when limiting itself to existing accumulations of savings as the sole source of financing for new capital — and for circulating media, whether in the form of coin, cattle, commodities, or anything else. This severely restricted the rate at which new capital could be formed. Clearly, as long as the financial system remained primitive, so did the economy. As Harold Moulton explained:
The creation of capital in a primitive society was a very direct process. A fisherman in off hours contrived a rude net of grass or reeds, thereby increasing his future capacity to catch fish. Or a farmer used a sharp stone to convert a branch of a tree into a rude spade or a plow with which to loosen the soil. Capital formation, under such circumstances, was a purely individual matter, dependent solely upon devoting a portion of one's energies to producing capital goods. For the moment there may have been a decrease in the amount of consumption goods that might have been produced during the hours devoted to the creation of capital; but as a result of the temporary sacrifice an expansion of consumptive satisfactions was realized in the future. (Moulton, The Formation of Capital, op. cit., 11)It would not be until the "invention" of "issue banking" (as opposed to "deposit banking") that the present value of future marketable goods and services could be monetized and used to finance the formation of the very capital that produced those same goods and services. It was not until the development of a type of financial institution that could not only lend out what it took in as deposits (deposit banking), but also issue promissory notes against the present value of future marketable goods and services (issue banking), that it would finally become possible to take advantage of the full productive capacity inherent in an economy.
This is a lesson that today's policymakers, trapped in the Keynesian assumption that only existing accumulations of savings can be used to finance capital formation, have yet to learn. Consequently, instead of using the financial system and the money creation powers of the commercial banking system backed up by the central bank to provide liquidity for private sector growth, they use these extremely powerful tools to redistribute existing wealth, concentrating not on increasing production, but on dividing up an ever-shrinking pie.
In the next posting in this series, we will see how the invention of issue banking increased the rate of capital formation but how, despite the promise inherent in the advance in financial technology to spread ownership broadly, it was almost immediately hijacked for political purposes and used to increase State power at the expense of individual human dignity and personal sovereignty.