Tales of Soft Money — ‘Bad Money’ of the Byzantine Empire

The sick, wounded man that was Rome settled in Constantinople under Constantine the Great and was soon to thrive again under better money. One chapter of Money Dethroned details the monetary progression of that empire; the centuries passed and the pure gold coinage of Constantine became an ever more ancient relic. And so it was after having escorted a Greek princess married to Öz Beg Khan, to the Byzantine Empire's capital, that 14th century traveler Ibn Battúta first mentioned the decadent state of the money used there:

When it became clear to the Turks who were in the khátún's [the princess's] company that she professed her father's religion [Christianity] and wished to stay with him, they asked her for leave to return to their country. She made them rich presents and sent them an amir called Sarúja with five hundred horsemen to escort them to their country. She sent for me, and gave me three hundred of their gold dinars, called barbara, which are not good money, and a thousand Venetian silver pieces, together with some robes and pieces of cloth and two horses, which were a gift from her father, and commended me to Sarúja. (Battúta, 1325-1354, p. 164)

Öz Beg Khan's third wife, in other words, had only nominally embraced Islam. Battúta mentions her drinking wine and eating swine, which likely caused some anguish for him and his company as they now faced a large force of Greek soldiers welcoming their princess. But although not truly a Muslim, the princess still showed an interest in Battúta and his friends' wellbeing, as she was quick to punish a Greek cavalryman laughing at the Muslims as they prayed on the ground.

The barbara of which Battúta spoke was, according to H.A.R Gibb, the debased hyperpyron. The story of Byzantine money is, as was the case with much contemporary coinage, slightly different from that of primitive monies since it was Greek Emperors and not foreign traders that debased it. Certain aspects of the dynamics of money remained the same however, as we soon shall see.

First Signs of Decay

Although the history of the Empire goes far back, we will enter it with the ascension of Leo III (Leo the Isaurian) in the year 716 A.D., as his extensive reforms are what caused many historians to separate the Eastern Roman Empire from the Byzantine Empire. The Empire had, prior to the sound reforms, been in a rather drastic decline, with taxes extracted from the populace to such a degree that not enough savings could arrest a decline in the amount of capital. In other words, factories, farms and infrastructure fell into disrepair. Aggressive neighbors had conquered many provinces. But Leo did in fact inherit a monetary system of undiluted gold coins known as bezants in Europe; these were the solidus coins that Constantine prudently had introduced centuries earlier. And there was still some life in the old Roman legal system that favored and facilitated commerce, so Leo the Foreigner, against all odds, managed to save the Empire from imploding.

Leo was not the only Byzantine regent struggling with an empty treasury in the face of famines, wars, natural disasters and varying degrees of a malfunctioning administration, and to his credit, he, unlike many others, did not touch the Empire's money. Some of the first mentions of such practices relates to the reign of Nikephoros II Phokas. Crowned in the end of the 10th century, he adopted policies aimed at strengthening the Byzantine military that had become wholly reliant on foreign mercenaries. For these policies he needed money, and despite curtailing expenses related to courtier pensions and monasteries, those were not enough. George Finley, in his monumental History of the Byzantine Empire, mentions Nikephoros' strategy that sowed the seed to Battúta's disappointment:

The worst act of his [Nikephoros II] reign, and one for which the Byzantine historians have justly branded him with merited odium, was his violation of the public faith, and the honour of the Eastern Empire, by adulterating the coin, and issuing a debased coin, called the tetarteron. This debased money he employed to pay the debts of the state, while the taxes continued to be extracted in the old and pure coin of the empire. The standard of the coinage of the Eastern Empire, it must always be borne in mind, remained always the same until the taking of Constantinople by the Crusaders. The gold coins of Leo III. [8th century] and of Isaac II. [12th-13th century] are of the same weight and purity; and the few emperors who disgraced their reigns by tampering with the currency have been branded with infamy. (Finlay, History of the Byzantine and Greek empires, from DCCXVI to MLVII., 1853, p. 389)

Nikephoros II's unpopularity had him murdered on the 10th December 969 A.D., by ambitious relatives in his own palace. Although Nikephoros II by no means was a decadent despot in other regards (usually living as a soldier, he preferred to sleep on the floor and not in his royal bed), his main legacy seems to have been the act of debasing the empire's pure money. Nikephoros II's reign was succeeded by various emperors - some good and some bad. Periodically, taxation was increased to the degree that it caused much suffering. One anecdote from Michael IV's reign describes the emperor and his sister traveling to Ephesus and consequently having to witness the misery of the poorer part of the population outside of the capital. Michael's sister implored him to lower their tax burden, whereupon he coldly answered "You reason like a woman, ignorant of the necessities of the imperial treasury".

The newborn tradition of debasing the empire's coinage continued under the reign of Constantine IX Monomachus, likely due to a costly war against a massive army of Pechenegs, and has been detailed by Costas Kaplinis in his article The Debasement of the "Dollar of the Middle Ages". It appears that little is documented regarding Constantine IX's acts of debasement, but uncovered numismatic evidence revealed a drop in gold content of the bezants of around 10 percentage points. A lighter coin, the tetarteron, was debased by around 20% (Kaplanis, 2003, p. 770). George Finley marked the reign of Constantine IX as the start of a slow, inevitable decline.

A Debased Defense

The instability of the Empire led to revolts, usurpers, and general unrest. After a Byzantine loss in the battle of Manzikert against Seljuk Turks in 1071 A.D., the reigns of emperors were often short lived. At the time of Romanus IV, who was captured at Manzikert, the gold content of bezants seems to have been around 70%. Nikephorus III, an incompetent man more interested in royal parties than in administrating his empire, wasted vast sums of public money and debased the coinage. Not long after his short reign ended, Constantinople was sacked by Slavs, Bulgarians and Greeks in revolt, marking yet another clear point in the decline of the Empire.

The reign of Alexius I, coronated in 1081 A.D., fared little better:

The unpopularity of Alexius among the people was caused by the severity with which the public taxes were collected, by the injustice of the monopolies he created for the profit of the fisc and of members of the imperial family, and by the frauds he committed in adulterating the coinage. This mode of cheating his subjects was carried to a greater extent by Alexius than it had been by any of his predecessors, and it is the strongest symptoms of the incurable decline in the government of the Byzantine empire. [...] Alexius paid the public debts in his own debased coinage, but he enforced payment of the taxes, as long as it was possible, in the pure coinage of earlier emperors. (Finlay, History of the Byzantine and Greek empires, from MLVII to MCCCCLIII., 1854, pp. 75-76)

When later dealing with the other nations in Europe (where pure Byzantine gold coinage had circulated freely and with huge success), Alexius was humiliatingly forced to stipulate that he was paying with coins carrying the portrait of other emperors than himself. In addition to causing a loss of faith in public dealings with the empire, Byzantine commerce in the Mediterranean declined as well. The credit of Greek merchants was soon ruined and large amounts of capital transferred to the republics of Italy. The gold content of the bezants under Alexius had fallen to as low as 10% before the introduction of a new gold coin called the hyperpyron (which, as we know, Battúta later observed debased and bastardized). Yet, the Empire suffered many long decades with Alexius before he died and was succeeded by his son John II (Comnenus), who was much more capable.

Administrative mismanagement continued up to the point that a force of Latins (mainly Italians), temporarily managed to break the Byzantine Empire. George Finley summed up that event:

A despotism supported by personal influence soon ruined the scientific fabric which had previously upheld the imperial power. The people were ground to the earth by a fiscal rapacity, over which the splendor of the house of Comnenus throws a thin veil. The wealth of the empire was dissipated, its prosperity destroyed, the administration of justice corrupted, and the central authority lost all control over the population, when a band of 20,000 adventurers, masked as crusaders, put an end to the Roman empire of the East. (Finlay, History of the Byzantine and Greek empires, from DCCXVI to MLVII., 1853, p. 12)

John III, now ruling over the Empire of Nicaea, had multiple good traits, but he continued his predecessors' habit of issuing debased coinage, with only two thirds of it being pure gold. John's son Theodore II carried on with the same coinage composition, while Michael VIII later coined money with only fifteen out of twenty-four parts being pure gold. This last act was cleverly done under the pretense of the need to change the gold coinage to commemorate the recovery of Constantinople from the Latins.

Andronicus II issued coins with fourteen parts gold and ten alloy, and in the end debased it further to equal parts gold and alloy. It is likely that it was the bezants of Andronicus II, whose reign lasted until 1328 A.D., that Ibn Battúta observed in Constantinople only a few years later. As a passing and perhaps unimportant testimony to the non-productive, bureaucratic state of the Byzantine Empire at this time, Battúta noted:

Most of the population of the city [Constantinople] are monks, ascetics, and priests, and its churches are not to be counted for multitude. (Battúta, 1325-1354, p. 162)

It should now be clear in what direction the money of the Byzantine Empire, as with that of many other empires now vanquished, was heading. By mixing alloy with the pure gold, emperors could easily cut production costs of money, obtaining immediate seigniorage. So while gold in and of itself can be considered hard money in the sense that it has a high degree of hardness (it was hard to produce more in relation to existing stock), the monopoly of money production by the state made a similar dilution possible anyway. While its bezant predecessors had changed hands as far away as India and the British Isles, the newer Byzantine coinage of course fell out of favor as debasements caused it to be despised everywhere.

In 1453 A.D., Emperor Constantine XI's body lay slain among the corpses of his compatriots. The Turks had conquered Constantinople, and many Greek families suddenly found themselves destined for hopeless slavery. It is not possible to estimate to what degree a continuous debasement of the money influenced the Empire's capacity to uphold its borders, but it is highly likely the loss of faith in the monetary system had negative long-term repercussions on commerce, investments and ultimately defense. It is worth adding that after the annihilation of the Byzantine Empire was a fact, and after the brutal dethronement of its last emperor was but a distant memory, pure gold bezants continued to be used in commerce for centuries.