Thread by @tymoignee

I am almost done with my study of the Roman monetary system (mostly from the denarius system to the fall of the western Roman Empire with a bit of intrusion into what happens "immediately" before and after). It has been a 6-month journey leading to 100 pages of notes. 1/

I have looked at the lit with a financial approach to monetary systems in mind (see my 2014 paper): did monetary instrument circulate at par?Why?Why not?What were the redemption mechanisms? did they work or not?What was the unit of account?Did it change?Who were the issuers?etc2/

I have not restricted myself to coins, that are at best only half of the story, but also have studied extensively banking where the work of Andreau, Harris, Bogaert, van Reden, and others are very helpful 3/

Here are a few thoughts on what have found
1- Historians are still using a framework of analysis based on the money multiplier and on bankers as mere intermediaries. Bankers are viewed as coin lenders. This unfortunately narrows their framework of analysis of the evidence. 4/

Bankers were engaged in pure scriptural activities that transferred funds on the book and granted credit. The credit operation took the form of the banker accepting a personal debt from someone (nomen/mutuum) and making a payment on behalf of that person; no coin were used 5/

2- The debate between the metalist and chartalist is there with some taking a middle of the road approach like Katsari. However, the debate is sometimes framed incorrectly. Chartalists do not say that the metallic content is unimportant or that people do not care about it 6/

What chartalism says is that the face value of the coinage, not its metal content, is the anchor around which the monetary system is managed. The goal is to maintain a constant nominal value, which means that metalic content needs to be adjusted because of change in conditions 7/

that led the intrinsic/metalic value to rise above the face value of the coinage or changed the relative metalic values (mint equivalents). That can happen for numerous reasons include wear, change in relative price of metal, problem to enforce face value, etc.8/

of course if the authorities do nothing then coins will start trading outside par. That is not a point against chartalism. 9/

3- On a related note there is a question about the valuation of the coinage and its fiduciarity and the view of roman thinkers about their coinage: did coinage trade at face value? was face value higher than intrinsic value? was the coinage merely a stamped bullion?

The consensus is that coins usually traded at their face value but that did not prevent third parties to hoard "good" coins or to trade them at a different value at times. Some see that as evidence of metalism, I see this as normal adjustment in an otherwise chartalist system.10/

There is many examples of such behaviors today with people hoarding pre-1982 pennies and nickels e.g. That does not make the system metalist. People (or at least a subgroup made of money changers & those aware of money issues) make rational choice to discriminate among coins 11/

Regarding the fiduciarity of coins there are clearly two periods with one where FV=IV and one (starting around 150-200AD) with FV>IV. The first period, however, does not mean that coins were mere bullion. Roman thinkers were very careful to distinguish "money" and "commodity" 12/

The first period must have been a period of high stability in metal prices because there is very little debasement and coins traded at their nominal value and were counted rather than weighed. See this for example from Elliot 2014 regarding silver coins 13/

4- On the fiscal side and its link to the coinage the literature still views debasement and taxation are mutually exclusive also there is an analysis of the role of tax in the management of the monetary system. 14/

Corbier notes that "The link between coinage debasement and taxation is strong because the coins that the emperors issued returned to them in taxation" However it took some time for official to understand the link between the coinage and taxation 15/

and it is not until the 3rd century AD under Diocletian that there is a full recognition of the implications "with the monetary and fiscal reforms of Diocletian, there begins to be an awareness of the link between coinage and taxation" still this was not recognized fully 16/

The debasement that occurred at that time were a respond to the fiscal needs but it did not mean that taxation was not needed. Given the state of the economy at the time, taxation should have risen as the debasement went on. 17/

The view of taxation as a fiscal tool leads to missing the point and many authors, including Corbier, view debasement and taxation as mutually exclusive means to finance the state when taxation was clearly a means to redeem the coinage that the state issued. 18/

Of course, this does not mean that taxation in coin (or even taxation itself) was easy to do, especially from the third century when the Empire starts to fall apart. Inflation then can emerge as military spending and political instability rise but redemption channels collapse 19/

It is also pretty clear that even in normal times redemption mechanism were imperfect and subject to corruption with the wealthiest (in charge of supervising tax collection) trying by all means to pass the tax burden on the other segments of the population 20/

5- I will just finish by saying that there were really two monetary instruments in this systems: coins and bank accounts. The first one was mostly used by the population for small local payments while the later was used for large local payments (banking was still localized) 21/

International payments were done through bills of exchange (permutationes) or involved payment in kind. For example, long-distance trade avoid coin use with boat selling goods in change for another load of goods. The state was the main coin mover/transporter 22/

With the goal of paying the army and monetizing the different corners of the empire. By the third century, the monetization process declines and we see a return to taxation in kind (something that never disappeared), which further contributed to demonetization. End/