Byzantine Economy - Economic and Fiscal History

Economic and Fiscal History

The Eastern Roman economy suffered less from the Barbarian raids that plagued the Western Roman Empire. Under Diocletian's reign, the Eastern Roman Empire's annual revenue was at 9,400,000 solidi, out of a total of 18,000,000 solidi for the entire Roman Empire. These estimates can be compared to the AD 150 annual revenue of 14,500,000 solidi and the AD 215 of 22,000,000 solidi. By the end of Marcian's reign, the annual revenue for the Eastern empire was 7,800,000 solidi, thus allowing him to amass about 100,000 pounds of gold or 7,200,000 solidi for the imperial treasury. Warren Treadgold estimates that during the period from Diocletian to Marcian, the Eastern Empire's population and agriculture declined a bit, but not much. Actually, the few preserved figures that the largest eastern cities grew somewhat between the third and fifth centuries. By Marcian's reign the Eastern Empire's difficulties seem to have been easing, and the population had probably begun growing for the first time in centuries.

The wealth of Constantinople can be seen by how Justin I used 3,700 pounds of gold just for celebrating his own consulship. By the end of his reign, Anastasius I had managed to collect for the treasury an amount of 23,000,000 solidi or 320,000 pounds of gold. At the start of Justinian I's reign, the Emperor had inherited a surplus 28,800,000 from Anastasius I and Justin I. Before Justinian I's reconquests the state had an annual revenue of 5,000,000 solidi, which further increased after his reconquests in 550. Nevertheless, Justinian I had little money left towards the end of his reign partly because of the Justinian Plague, and the Roman–Persian Wars (Justinian spent large amounts of money in annual subsidies to the Sassanian Empire), which both harmed the economy. In addition to these expenses, the rebuilding of Hagia Sophia cost 20,000 pounds of gold. Subsidies to enemy states were also paid by Justinian's successors: Justin II was forced to pay 80,000 silver coins to the Avars for peace; his wife Sophia paid 45,000 solidi to Khosrau I in return for a year's truce, and then Tiberius II Constantine gave away 7,200 pounds of gold each year for four years. Since Emperor Heraclius changed the empire's official language from Latin to Greek in around AD 620, the solidus (plural: solidi) would thereafter be known by its Greek name, the nomisma (plural: nomismata).

The Byzantine-Arab Wars reduced the territory of the Empire to a third in the 7th century and the economy slumped; in 780 the Byzantine Empire's revenues were reduced to only 1,800,000 nomismata. From the 8th century onward the Empire's economy improved dramatically. This was a blessing for Byzantium in more than one way; the economy, the administration of gold coinage and the farming of the Anatolian peninsula served to meet the military's constant demands. Since Byzantium was in a constant state of warfare with her neighbours (even if only by raiding) the military required weapons to be manufactured by the bigger cities (such as Thessaloniki) whilst the smaller towns were subject to grain, wine and even biscuit requisitions by Imperial officers. Even though the soldiers' pay was minimal large armies were a considerable strain on Byzantium. As gold coins were spent on soldiers to serve in the army, these would in time spend their money acquiring their own goods and much revenue would return to the state in the form of taxation. As a result, the Byzantine economy was self-sufficient, allowing it to thrive in the Dark Ages. The success of the Byzantine army was in no small part due to the success of her economy.

Around 775, the land and head taxes yielded an estimated 1,600,000 nomismata annually for the empire. Commerce during this period slumped, therefore only contributing 200,000 nomismata annually. The expenditures of the period were quite large when compared to the annual revenues. Approximately 600,000 nomismata went to the payroll of the army annually while other military costs took another 600,000 nomismata annually. Supporting the Byzantine bureaucracy needed 400,000 nomismata. Also, imperial largess cost the treasury 100,000 nomismata every year. All of these expenses meant that the Byzantine government had only about 100,000 nomismata in surplus revenue each year for treaties, bribes, or gifts.

Expenses again soared, when a massive Muslim army invaded the empire in 806, forcing Nikephoros I to pay a ransom of 50,000 gold coins and a yearly tribute of 30,000 gold coins. In order to impress the Caliph of Baghdad, Theophilos distributed 36,000 gold coins to the citizens of Baghdad, and in 838, he was forced to pay 100,000 gold dinars to the Caliph. The Byzantine economic recovery in the early 800s can be seen by the fact that Emperor Theophilios was able to leave 7,000,000 nomismata in the imperial treasury for his successor in AD 842. After Theophilos' death his wife Theodora II continued his successful policies and even increased the imperial reserves to 7,848,000 nomismata, but unfortunately under their son Michael III the reserves dwindled to about 100,000 nomismata. However, under Basil I's prudent economic policies, the state quickly raised 4,300,000 nomismata, far more even than the empire's annual revenue of 3,300,000 nomismata. Sviatoslav I was paid 15,000 pounds of gold by Nikephoros II to invade Bulgaria in AD 968. By the time of Basil II's death in 1025, the annual income had increased to 5,900,000 nomismata, which allowed him to amass a large surplus of 14,400,000 nomismata (200,000 pounds of gold) in the treasury for his successor.

Around 850, the land and head taxes yielded an estimated 2,900,000 nomismata annually for the empire. Commerce during this period increased dramatically, therefore contributing 400,000 nomismata annually. The expenditures of the period were large, but manageable by the treasury. Approximately 1,400,000 nomismata went to the payroll of the army annually while other military costs took another 800,000 nomismata annually. Supporting the Byzantine bureaucracy needed 500,000 nomismata. Also, imperial largess cost the treasury 100,000 nomismata every year. All of these expenses meant that the Byzantine government had about 500,000 nomismata in surplus revenue each year, much more than in the 8th century.

From the tenth century, however, until the end of the twelfth, the Byzantine Empire projected an image of wealth and luxury. Constantine V's reforms (c. 765) marked the beginning of a revival that continued until 1204. The travelers who visited its capital were impressed by the wealth accumulated in Constantinople; riches that also served the state's diplomatic purposes as a means of propaganda, and a way to impress foreigners as well its own citizens. When Liutprand of Cremona was sent as an ambassador to the Byzantine capital in the 940s, he was overwhelmed by the imperial residence, the luxurious meals, and acrobatic entertainment. Nevertheless, the Byzantine economy went into a long decline until the Comnenian Dynasty was able to revive the economy. In the aftermath of the Battle of Manzikert, Alp Arslan at first suggested to Emperor Romanos IV a ransom of 10,000,000 gold coins, but later reduced it to 1,500,000 gold coins with a further 360,000 gold coins annually.

In exchange for an alliance, Alexios I sent 360,000 gold coins to Emperor Henry IV. The wealth of the empire under the Comnenians can be seen by how Emperor Manuel I was able to ransom some Latin prisoners from the Muslims for 100,000 dinars, then 150,000 dinars for Bohemond III in AD 1165, 120,000 dinars for Raynald of Châtillon, and 150,000 dinars for Baldwin of Ibelin in 1180. When Manuel became emperor he ordered 2 gold coins to be given to every householder in Constantinople and 200 pounds of gold (including 200 silver coins annually) to be given to the Byzantine Church. When his niece Theodora married King Baldwin III of Jerusalem in 1157, Manuel gave her a dowry of 100,000 gold coins, 10,000 gold coins for marriage expenses, and presents (jewels and silk garments) which were worth 14,000 gold coins total. The expense of Manuel's involvement in Italy must have cost the treasury a great deal (probably more than 2,160,000 hyperpyra or 30,000 pounds of gold). Then he also promised to pay 5,000 pounds of gold to the Pope and the Curia. During his reign, Manuel bought a very rich jewel (for 62,000 silver marks) which was used during the coronation Latin Emperor Baldwin I. The main source of the state's wealth in the twelfth century was the kommerkion, a customs duty levied at Constantinople on all imports and exports, which was stated to have collected 20,000 hyperpyra each day. This, combined with other sources of income, meant the empire's annual revenue was at 5,600,000 hyperpyra in 1150. Under the Komnenian emperors, many exemptions of trade duties were given to the Italian traders, which meant the loss of about 50,000 hyperpyra annually. A Venetian embassy visited Constantinople in 1184 and an agreement was reached that compensation of 1,500 pounds of gold (or 108,000 hyperpyra) would be paid for the losses incurred in 1171. By the end of Manuel I's reign the amount of money used to maintain the Komnenian imperial family is said to be able to maintain an army of 100,000 men.

After the demise of the Komnenoi, the Byzantine economy declined under the impact of several factors: the dismemberment of the Empire after 1204, the successive territorial losses to the Turks (although the strong economic interaction of Byzantine territories with those lost by the Empire continued), and the Italian expansion in the Mediterranean and the Black Sea. When Isaac II Angelos became Emperor in 1185, a mob broke into the palace and carried off 1,200 pounds of gold, 3,000 pounds of silver, and 20,000 pounds of bronze coins. In 1195, Holy Roman Emperor Henry VI forced Byzantine Emperor Alexios III Angelos to pay him a tribute of 1,000 pounds of gold (originally 5,000 pounds of gold) and in 1204 Alexios III took 1,000 pounds of gold (or 72,000 hyperpyra) when he fled Constantinople. The presence of the crusading army not only culminated in a violent sack that dispersed and destroyed the accumulated wealth, and culture of centuries, but was accompanied by a series of fires that ravaged the northern and central sections of the city resulting in a steady exodus of the city's residents to the Greek centers of government in exile. The sack of Constantinople by Latin crusaders in 1204 was an economic catastrophe. Due to the financial crisis, the state could only pay 100,000 silver marks (65,000 pounds of pure silver) out of 200,000 silver marks (equivalent to 800,000 hyperpyra) to the Crusaders in 1204. The official tally of plunder from Constantinople was about 900,000 silver marks, the equivalent of about 3,600,000 hyperpyra or 50,000 pounds of gold. The impoverished Latin emperors melted down statues for coin, while the Venetians exported their declining profits, along with choice relics and architecture spolia for their churches. In 1237, Latin Emperor Baldwin II pawned the Crown of Thorns to a Venetian merchant for 13,134 gold coins.

By the time the Palaiologoi took power, Italian merchants had come to dominate the trade by sea whilst Turkic incursions prevented any success from trade across roads. Michael VIII Palaiologos strove to restore the capital's greatness, but the resources of the empire were inadequate. In 1282, Michael VIII was forced to drain the treasury to pay the enormous bribe of 60,000 hyperpyra to King Peter III of Aragon to invade the Kingdom of Sicily. Constantinople became once more, as in the seventh and eighth centuries, a ruralized network of scattered nuclei; in the final decades before the fall, the population numbered 70,000 people. Gradually, the state also lost its influence on the modalities of trade and the price mechanisms, and its control over the outflow of precious metals and, according to some scholars, even over the minting of coins. By 1303, the empire's annual revenue dropped to less than 1,800,000 hyperpyra, under Andronikos II Palaiologos. In 1321, only with extreme effort was Andonikos II able to raise revenues to 1,000,000 hyperpyra.

The Byzantine economy had declined so much that by 1343, Empress Anne of Savoy had to pawn the Byzantine crown jewels for 30,000 Venetian ducats, which was the equivalent of 60,000 hyperpyra. In 1348, Constantinople had an annual revenue of 30,000 hyperpyra while across the Golden Horn in the Genoese colony of Galata, the annual revenue was 200,000 hyperpyra. When Emperor John VI Kantakouzenos attempted to rebuild the Byzantine navy, he was only able to raise an inadequate 50,000 hyperpyra. In 1453, the economy of the Genoan quarter in Constantinople had a revenue 7 times greater than that of the whole Empire - not even a shadow of its former self. The only success during this period was when the Republic of Genoa agreed to pay a war indemnity of 100,000 hyperpyra in 1349. When Emperor John V Palaiologos was captured by Ivan Alexander in AD 1366, he was forced to pay a ransom of 180,000 florins. In AD 1370, the empire owed Venice, 25,663 hyperpyra (of which only 4,500 hyperpyra had so far been paid) for damage done to Venetian property. In February 1424, Manuel II Palaiologos signed an unfavorable peace treaty with the Ottoman Turks, whereby the Byzantine Empire was forced to pay 300,000 silver coins to the Sultan on annual basis. Emperor Constantine XI owed Venice 17,163 hyperpyra when he died in AD 1453.

The exact amount of annual income the Byzantine government received, is a matter of considerable debate, due to the scantness and ambiguous nature of the primary sources. The following table contains approximate estimates.