The Economy of the Byzantine Empire
The Byzantine Empire, that is the Eastern Roman Empire, lasted quite a long time; from 284 (first division of the Roman Empire) to 1453. This makes the stability of its monetary system and its long periods of economic expansion all the more impressive. For much of its history, Byzantium was rich and prosperous. As the history of Byzantium is extensive, covering almost twelve centuries from late antiquity to the end of the medieval era, this post shall by necessity be somewhat long.
The Eastern Empire was always richer and much more developed than the Western one, though it had less potential of further growth; Minor Asia, Syria-Palestine and Egypt had agricultural economies that were well established and as such they had little room for further development but nonetheless they were fertile and prosperous. They provided the bulk of state revenues; Egypt alone must have provided 30 to 40% of the Byzantine budget according to estimates.
Between the time of Diocletian to the time of Marcian (284–457), the Byzantine state established its long-lasting institutions. The expansion of the bureaucracy and army by Diocletian and Constantine were accompanied by an expansion of taxes and an improvement of the tax-collecting abilities of the state; Diocletian introduced a new system of taxation based on heads (capita) and land (iugera). Runaway inflation had been a major problem for the empire since the crisis of the third century. Diocletian attempted to solve this problem by trying to reestablish trustworthy minting of silver and bullion coins but his attempts ended up in failure. Constantine, instead of trying to restore the silver currency, concentrated on minting large quantities of good standard gold pieces, the Solidus or Nomisma. Solidus has been called the dollar of the Middle Ages and was highly valued in Western Europe. Its value remained largely stable until the crisis of the eleventh century and the devaluations of that period. A large part of Byzantium’s prosperity thus was a result of Constantine’s monetary reform.
Taxation, which was heavier on the countryside, led many people from rural areas to move to the major cities of the Empire, which as such saw a population growth. Constantinople saw explosive growth, benefiting from its status as an imperial capital, and by the 450s it had a population of about 200,000. Other major cities included Alexandria, Antioch and Thessaloniki. The Empire had about nine hundred places with the legal status of cities but most of them were really just towns, with average size of one thousand inhabitants. Those cities were the economic centers of the Empire as they were responsible for tax collection.
The tax collection from the countryside for the reimbursements of the expanded state machinery (army and bureaucrats) increased trade in cities that served as administrative centers and also benefited outlying territories where border armies were stationed. As the majority of Easterners lived near the sea, this facilitated trade as moving goods through sea and rivers was much cheaper than land transportation.
The expansion of population in cities and fleeing of rural population had its downsides in rural depopulation; Emperors took legal measures to keep smallholders from becoming tenants and to prevent tenants from leaving. The Emperors, neither during this period nor later on, saw with a good eye the expansion of large landowners as they could be a threat to the state. Another downside for the economy were the constant raids in the Balkans by invaders such as Goths and Huns, which impoverished part of the Balkans.
In the period from Leo I’s reign to the first half of Justinian’s reign (457–541) was a period of economic expansion and prosperity for the Byzantine Empire. The Empire was able to expand territorially and instead of just defending itself from the Germanic invaders, it was able to launch a counterattack that allowed the takeover of North Africa, Italy and parts of Spain. The Byzantine lands stood in stark contrast with the lands of the West in the late fifth and the sixth centuries. While the Western lands were fragmented among competing and unstable barbarian kingdoms, Roman institutions were maintained in the East. This allowed for greater prosperity.
The economic reforms of Emperor Anastasius greatly helped both the Byzantine economy and the fiscal situation of the Empire: he reformed imperial bronze coinage that replaced the small nummi, which had little value, with a large coin 40 times their nominal value. Anastasius substituted paying taxes in kind with paying taxes in cash instead to promote currency circulation and monetize the economy. This also had the added effects of simplifying calculations and reducing the transportation costs. Unlike goods, which could be spoiled, cash allowed the government to be paid in full value.
In order to prevent embezzlement by officials, Marinus (one of Anastasius’ counselors) introduced a tax-collecting reform: he took the task of collecting taxes from the local curiales and instead gave it to state-appointed vindices (defenders of the city). Anastasius also set out to create a treasury reserve. As he had less need to not upset officials, he curbed bribes, regulated official fees and kept a close watch over muster rolls and military payrolls. He also abolished the chrysargyron, a tax on commerce that provided rather small revenues but was hated by the empire’s merchants. The emperor used revenue from his private estates to make up for shortfalls in revenue. Anastasius’ economic reforms had immediate positive results. With the above mentioned administrative reforms, the rather modest tax cuts and the maintenance of spending, the emperor was able to rapidly fill the treasury.
Thanks to the economic prosperity of the East and the economic reforms of Anastasius that filled up the treasury, Justinian was able to make his above-mentioned reconquests. Unfortunately for him, this economic trend came to a halt thanks in large part to the plague but also to the exhausting wars in Italy.
The Great Plague which occurred in 541/2 was a turning point in Byzantine economic history. It ravaged the Mediterranean world in eighteen waves, occurring on average one every twelve years. The population of the Empire may have decreased as much as 30% while Constantinople may have lost up to 20% of its population. Cities declined and a trend of de-urbanization began; cities were gradually transforming to towns and were being fortified while economic activity began showing signs of decline. Tiles disappeared in favor of wooden planks or thatch for roofing while beaten floors replaced stone ones.
This economic downturn was exacerbated by the disasters of the seventh century; first a long and costly war with Persia and then rapid loss of land as the Arabs conquered Syria-Palestine, Egypt and North Africa, the Slavs occupied much of the Balkans with the exception of coastal Greece and Thrace and the Lombards occupied much of Italy.
Among those loses, the loss of Egypt and Syria were the most disastrous. Egypt contributed revenues of something between 1.4 and 2.6 million solidi. Syria must have generated about 1 million solidi. The loss of the east may have accounted for as much as 75% of the state’s revenues. Those regions were also densely populated, so there was demographic loss for Byzantium too. It has been estimated that in 600, Byzantium had a population of 17 million while in 641 it had a population of 10.5 million.
The economic downturn caused a decline in trade; the number of shipwrecks in the seventh century is less than half that of the sixth. There was a decline in monetarization and while Byzantium was never fully demonetized, there was a partial barter system, especially in the Balkans where Slavs did not have monetary traditions. There is evidence of some trade though. The Miracles of St. Demetrios contain details about the grain supply of Thessalonica and how disruption to the links with the city’s hinterland forced the population to look for grain supplies from further afield.
Byzantium became more agrarian and less densely populated during this period. Although such trends had begun before Heraclius’ reign, the war with Persia sped up those changes. Warfare devastated the countryside in Asia Minor and rural populations were often displaced. This had a negative effect on the rates of reproduction. The scarcity of men transformed the Empire and its economy. Rather than being a network of cities as in late antiquity, the Empire was now a mostly rural state with few towns and supervised by Constantinople, the only major city in the Empire. A large number of cities had been abandoned, others shrunk into fortresses while in some other cases the inhabitants moved into higher (and thus more defensible) ground. In some instances, cities were created on virgin sites or on the sites of ancient fortresses that could provide better defense to the inhabitants.
Overall, it is estimated that cities shrunk to a quarter of their previous size and all of them were fortified. Cities though continued to function as sites of markets and fairs. Although there was a demographic and economic depression, that can be seen in numismatic records, there was still a vivid, rural economy. The basic unit of the fiscal system were the villages (choria) in the countryside, where the peasants that worked the farmlands lived. Arab geographers of this period would describe the Empire as having no cities and being instead made up of prosperous fortresses and villages.
With the stabilization of the Empire brought by Leo III (717–741), who foiled an Arab siege on Constantinople, and the military exploits of Constantine V (741–775), there was a return to a sense of stability. Although the Empire, as stated above, was mostly rural, with the exception of Constantinople which remained the only real polis (city), there was a slow but steady recovery of both the economy and monetary circulation in the eighth century.
The Byzantine Empire, unlike most other states in Europe, retained a powerful and centralized state; it had an educated bureaucracy, a standing army and the ability to collect taxes. The state provided an integrating framework through its fiscal system and monetary mechanism while it was also the largest landowner and acted as a major pole of demand.
The money economy was mostly a matter of recycling as there were no great urban centers with the exception of Constantinople and Thessaloniki. The peasantry paid the bulk of taxation which in turn was siphoned to the capital and was redistributed to state employees. The money thus trickled down to various economic strata and some returned to the producers. Market forces had little impact on the economy.
The most important tax was the land one; the tax was estimated on the value of the land each person owned. One modios (c.889 m2 or 1/10 of a hectare) of first-quality land was worth one gold coin, second-quality land was worth half a gold coin and third-quality land (pasture) was worth one third of a coin. Vineyards had much higher value. Peasants also paid a personal tax, introduced in the 660s, that later on became a household tax (kapnikos). The state also collected tax on domestic animals. Tax-collection was supervised by a civil service in Constantinople although land and population registering was done locally.
Agricultural production was mainly vines, olives and fruits such as apples, pears, plums and cherries. Industrial textile plants like flax and hemp are also documented. With regards to monetary developments, the Isaurian dynasty introduced the miliaresion, a new silver coin. This helped in trade, which increased in this period. The trade was regulated by the state as seen by the Rhodian Sea Law, which describes the responsibilities of merchants. Foreign merchants were allowed to Constantinople but their activities were limited. While there were no import prohibitions, there were prohibitions on certain exports such as cereals, salt, wine, olive oil, fish sauce, precious metals such as gold, iron and arms as well as silk. In Constantinople and in local towns, there were fairs and small marketplaces in open places where exchanged could happen.
At the end of the eighth century, the appearance of large aristocratic families who based their local power to the themes’ (provinces) military organization and the gradual stabilization of frontiers meant that more disposable wealth was maintained in the provinces. The balance in the economy began to shift towards the market and this led to both urban growth and the investment of rich families in peasant property, thus building up retinues and clients. This began worrying the Emperors who took measures to protect peasant property from the aristocrats. This struggle between the state and big landowners is a constant theme in Byzantine history.
From 830s, as the Byzantine state expanded its frontiers and internally experienced economic expansion, there was an increase in both rural and urban populations and in production as well as in monetarization. The annual increase in the index of coins found in Athens and Corinth were 1 and 4 percent respectively, a fourfold/sevenfold increasing in 969 respectively.
In this period, thanks to the economic expansion that led to a shift towards the market, Byzantium had a mixed economy that combined market regulations with a market-based economy. The economy would shift ever more towards the market as the Empire expanded and so did its population and economy.
This economic and social change was (unsuccessfully) slowed down by Emperor Basil II. He expanded legislation that protected smallholder peasants from the great families. He also forced magnates to pay for the arrears owed by peasants. He sought to build a free peasants society with a simple agrarian (and rather primitive) economy because he considered that this would provide strong foundations for the imperial government. He wanted the economy and society to be organized in such a way that they would support the imperial war effort and thus he felt that they needed to be under rigid imperial control. His successors reversed this legislation.
In the eleventh century, urban and rural growth continued. This was slowed down only temporarily by the setbacks suffered by the Byzantines who lost the interior of Asia Minor to the Seljuk Turks. Under Michael VII, the currency was devalued in a blow to the Byzantine monetary system but under the Komnenoi Dynasty (1081–1185) stability was restored.
At this point, it was the Balkans that was the wealthiest region of the Empire, displacing Anatolia which had held that role between the seventh and eleventh centuries. With the loss of the Anatolian interior, the Empire relied on Thrace, Macedonia, Bulgaria and to a lesser degree in Serbia to provide for cattle and horses. Animal raising and horse breeding was practiced on large estates and by the Vlachs. Bulgaria, Thessaly, Thrace and Macedonia provided cereals while the Mediterranean coastlands and Aegean islands provided olive oil and wine. Manufacturing and artisan production was linked with urban centers. Constantinople was the main hub of production while Corinth was the second major center while other smaller centers were located mainly in Greece.
Anatolia was divided between the interior that was poor and held by Turkic tribesmen and the richer coastal area that was under Byzantine control. The plateau held by the Turks was an important source for cattle and horses but it was poorer than the coastal areas of Anatolia and less populous while (as stated above) regions in the Balkans replaced the Anatolian interior in the provision of cattle and horses. From the remaining Byzantine lands in Anatolia, Bithynia provided cereals while the regions close to the Aegean produced wine and olive oil.
In the eleventh and twelfth centuries agricultural activity was taking place in an economic environment of greater urbanization and increased market activity. While there were no large scale irrigation projects, large property owners such as the monastery of Lavra carried out significant irrigation projects. Increased population and increase in production meant that famines were not recorded anymore and agricultural surpluses could be exported. The countryside was now dominated by large estates cultivated by rent-paying peasants. This helped in increasing production as large property-owners had more capital to invest on their estates than small property-holders of the previous period.
With regards to urban production, Constantinople in this period was major center of pottery construction. The second major center of production was Corinth. There was also growth in textile production, especially silk. High-quality silk was a matter of prestige for the Byzantines. The silk of highest quality was used by the Empire as a gift for foreign monarchs as it was a symbol of status. The increased wealth of both the aristocracy and the urban population increased demands for silk. Urban population grew greatly during this period; the Empire was far more urbanized during the Komnenian Dynasty than during the era of Justinian.
During this period, the West also saw economic growth and as such increased demands for luxury products to be found in the East. This increased trade between the Empire and the West, especially with Italian merchant republics. The Empire granted trade rights and privileges to Venetians, Pisans and Genoese, whose numbers in imperial ports increased; the most extensive of such privileges were granted by Alexios I to the Venetians as he wanted Venetian naval assistance to combat the Norman threat (from south Italy) and the Byzantine navy was not up to task. The establishment of Crusade states in the Middle East increased the number of Westerners in the Eastern Mediterranean. Although old orthodoxy was that such trading privileges had detrimental effects on native Byzantine merchants, it is now suggested that the opening up of the markets and free trade actually had a positive impact on the Byzantine economy and enriched Byzantines merchants too, many of whom cooperated and dealt with Italian merchants. It did give however to the Italians a greater share of the domestic market.
The conquest of Constantinople in 1204 by the crusaders was a major disruption in Byzantine history; for the first time, the central authority had been usurped by a foreign power and Byzantium fragmented. A full detail of the campaigns of the crusaders in the Byzantine world is out of the scope of this answer, but it can be sufficed to say that the crusaders were able to establish a couple of Latin states thanks to their military prowess. Those states included the Latin Empire (Constantinople, Thrace and parts of northwestern Anatolia) and its vassal states; the Kingdom of Thessalonica (Macedonia, Thessaly), the Duchy of Athens (Attica and Boeotia), the Principality of Achaea (Peloponnesus) and the Duchy of Archipelago (Cyclades). The Westerners brought with them the practice of Western feudalism, as they granted fiefs to noblemen and established classic feudal relations with them.
In the other Byzantine provinces, several local notables emerged as independent warlords (including Leo Sgouros, a Greek notable in the Peloponnese) but most of them were eliminated either by the crusaders (as in the case of Sgouros) or by fellow Byzantines (in Asia Minor mainly). This meant that only three major Greek successor states emerged; the Despotate of Epirus, the Empire of Nicaea (western Anatolia) and the Empire of Trebizond (Pontus).
There was a major disruption in the monetary situation of the Empire. In the twelfth century, the Empire had a common currency, foreign coins were not accepted and Byzantine gold was of major importance for international trade. The fall of the imperial center and the fragmentation of Byzantium meant that foreign coins entered local circulation and that Western gold currencies would dominate the Mediterranean trade. Byzantine coin shifted from gold to silver. The Greek successor states would create regional currencies, whose iconography also served ideological purposes. The Latin Empire too circulated its own coinages but it imitated the old Byzantine ones and did not introduce Western elements due to fear that they would not be accepted by the local populace.
The constant wars between the Byzantine states, the Latins, Bulgars, Serbs and Turks caused much instability and destruction that slowed down economic growth. Agricultural production suffered. The Empire of Nicaea followed protectionist trade policies aiming to protect its local merchants and to not rely on foreigners. The Emperors granted land to aristocrats and family members they trusted, a situation similar somewhat to the Western feudalism. Emperor John Vatatzes lowered taxes to increase economic production. It was the Empire of Nicaea that eventually reconquered Constantinople in 1261 and restored the Byzantine Empire.
After 1261, the properties of the state increasingly reduced and manufacturing became small scale. The independence of Serbia and Bulgaria meant that cereal and cattle production were no longer part of the Byzantine economy. Urban production suffered too as cities were far smaller and Constantinople was greatly depopulated. With regards to monetary developments, the Byzantine Empire under the Palaiologoi was the only state to maintain the tradition of trimetallic monetary system but in the fourteenth century they had to adapt and imitate the Venetian grosso with a coin called doukaton.
Emperors Michael VIII (1259–1282) and Andronikos II (1282–1328) exercised heavy fiscality and imposed extraordinary taxes to meet the expenses of recovering and defending their lands in an increasingly hostile environment. They also made extensive grants of privileges and lands to private individuals. This was also how the late Byzantine state financed its military forces; through a combination of grand of lands, tax exemptions, cash and rights to state revenues. A large part of the army was maintained through the use of pronoia grants, that is the granting of the state’s fiscal rights over an individual/group of individuals to soldiers. This was already used by the Komnenoi Emperors but became far more extensive after the fall of Constantinople in the Fourth Crusade. The pronoia system provided the state with inexpensive soldiers and it increased their effectiveness as they could afford better equipment and would be eager to defend their means of income.
In 1341, after the death of Andronikos III, a destructive civil war began between his friend John Cantacuzenos and his Empress Anna of Savoy. The war saw the intervention of Serbs, Turks and Bulgarians and the destruction of much of the already weak Byzantine economy. Byzantine economic and social structures were furthered weakened by the Black Death. Thrace had suffered such destruction that it relied on imports from Bulgaria and Crimea to feed its population. The fiscal situation was desperate. By the 1380s, Byzantium was a vassal of the Ottoman Empire and its dominions were Constantinople and some of Thrace, the Peloponnese and a few Aegean Islands. In 1453, Constantinople was overtaken by the Ottomans, ending the history of the Byzantine Empire
