Economy of Roman Empire Romanos Reign (Premysloides Dynasty)

Historical background
Eastern Roman Empire, with capital coastal city Constantinople, was always different from other states in Europe. Mixed ideas and culture of Near East and Eastern and Southern Europe with one of largest shipyard and port, Eastern Roman Empire was more trade-focused economy then other feudal states, not mention that Eastern Roman Empire was an absolutist imperium.

That mean, Emperor had supreme role in whole society, even in economy, which had very positive, but also very negative effects on economy and economical policy through Empire history, especially in case of inflation, trade barriers, budget deficit and massive bureaucracy.

Overview
When Romanos V. took Imperial Throne, still as Nicean Emperor, he ruled over impoverished and ruined realm. Except large city Thessaloniky, most of realm was agricultural, poor and depopulated because of epidemics, wars and Crusade. Only real trade ports were in Thessaloniky and Smyrna, while Empire lost control over trade outposts on Crimea and in southern Greece.

Urbanization level was much higher in Nicean Empire then in rest of Europe and Middle East, which was favourite for trade, artisanry, craftmanship and economic production. However, most of profits and revenues were spent on imperial military expenditures, corruption, bureaucracy, "Free Bread" policy and court expenditures.

Fiscal conservativism (1248-1250)
Most urgent problem was extreme budget deficit as result of revenue collapse in consequence of short, but bloody civil war between Imperial pretenders and also by rule of tyrannical and corrupted "Alexios Obésus". Obésus regime took many loans from Genoese, Venetia, Crusader states and France. When Romanos took throne, Empire had debt 10 million hyperpyrons ($500 million) and was unable to repay debt. Budget deficit was two million hyperpyrons ($100 million).

Constantin Chadenos, First Consul of Nicean (later Imperial) Senate and main financial advisor of Romanos and magistrate of economy Master Weng, together implemented policy of radical cut in spendings and cuts were done in every sphere. Court expenditures were decreased by 80%, finance for church charity was decreased by 50%, financial support for Orthodox church decreased by 50%, about 4,000 clerks employed by tyran Alexios Obésus were dismissed from their positions. Only in clerks case, Imperial Treasury saved nearly 200,000 hyperpyrons per year, 600,000 hyperpyrons were saved on decreasing of court and church expenditures and 40,000 saved from decreasing charity. With other spending cuts, Imperial Treasury was able to save more then one million hyperpyrons per year during 1249. On other hand, budget deficit extreme growth because of Venetian War and military expenditures grew from 900,000 hyperpyrons to nearly 2.5 million hyperpyrons.

Situation changed after fall of Venice, vassalisation of Genoa Republic and securing many important trade outposts on Black Sea, in North Africa and western Sardinia. During capture of Venice, Imperial Army was able to secure more then 10,000 pounds of gold (about 1.25 million hyperpyrons), most of these gold were immediately used on military expenditures and salaries for soldiers. Imperial Army confiscated other luxury goods (silk, textiles, painting, statues, jewels) in value of five million hyperpyrons and except for a few pieces, most of them were sold.

After end of war, Imperial Army and Navy was assigned to reserves and most of troops were sent to barracks or back to families. Military expenditures decreased to 300,000 hyperpyrons. Budget deficit was stabilized between 400,000 to 600,000 hyperpyrons.

On other hand, we must admit that imperial debt in ratio to GDP was low, only about 16%.

In annual magistrate report from December 1250, magistrate Weng and Consul Chadenos informed Emperor Romanos that current deficit (500,000 hyperpyrons, or 0.84% GDP per year) is acceptable and fiscal cuts should not be deepened, because it can be threat to imperial stability and society.

Reconstructionist Era (1250-1253)
Reconstructionist Era, or "Reconstruction of Roman Empire", was three years period from Liberation of Constantinople in January/February 1250 to expansion of trade exclaves in Africa, Spain and Sicily by Roman Empire. In these three years, Roman Empire with using of military engineers, foreign workers and local population focused on social, economical, technological and infrastructure reconstruction of weakened and ruined Empire.

First great project was "Constantinople Reconstruction". After Liberation, Emperor Romanos declared that all citizens of Constantinople, who will join reconstruction efforts, will be granted permanent tax-free and rent-free residency in Constantinople for them and their children. In about few hours, nearly 20,000 people signed in to reconstruction projects. "Constantinople Reconstruction" had many positive impacts on city: complete redesign of the sewer system, rebuilding and expansion of shipyard according Venetian plan for their New Arsenal, elimination of all wood buildings and replacement by stone and brick buildings, replacement of Theodosian Walls by Romanian Walls (despite common myth, Romanian Walls was named by Emperor Roman Angelos and not in honor of Roman Empire), creating network of marketplaces, wells, building number of bridges and complete replacement of ruined streets and roads within city.

Constantinople reconstruction was followed by "Thessaloniky Reconstruction" and many similar projects in Smyrna, Nicea, Nicomedia, Sanope, Athenes and Ragusa. While it was expensive projects, they opened way to reestablish trade dominance of Roman Empire and improve economic capabilities of realm. Expenditures were reduced by using of massive slave population from enslaved remnants of Venice.

In Imperial provinces, military engineers and technicians was used for road building and reconstruction and from 1250-1260, they repaired or built more then 1,000 miles of roads.

Weng Economic Reforms (1254/1263/1267)
At daily imperial government meeting with ministers, magistrates, legates and questors, Magistrate of Economy and Trade Weng introduced "Changes for Future", economic reform plan to change attitudes, economic system, development and situation in Empire. Weng during his career introduced and implemented three reforms - Changes for Future in 1254, New Way of Life in 1263 and Industry, Savior of Empire in 1267.

Changes for Future, Weng Szia Cho.

''Our Great Empire can't survive without full-scale reforms and changes in Empire itself. While decreasing the catastrophic budget deficit and implementation of reconstruction projects were first and very useful steps, it was only superficial and limited improvements. Without internal changes, most of these steps will be futile.''

''First of all, we must understand that Empire must toss away old ways of thinking. Imperial Administration is very effective and in except of some simplification procedures, Administrative should stay intact as it will be need to implement reforms. Old ways of thinking are through.''

''Guilds. Guild system is strong obstacle in economical development, internal and external. Most guilds behave like power interest groups with "altruistic" protection of their members on expense of all other parts of society. While it is understandable, its unacceptable. Guild system have extreme regulations, strict membership system, destructive effects on innovations and development, anyone who is not member of guild can not have own enterprise and free business. You can use guild collaboration with Latins as explain for implementing new "Guild Tax". Guild Tax will be taxation of all profits of guild members at 75% rate. Also, Imperial government will forbid guilds to buying new properties, new guildhalls and with 1st March, no new guild can be established and registered.''

''Imperial Trade Monopol. Imperial Trade Monopol is proud and weakness of Roman Empire. Total control over foreign trade decreasing competitiveness of Roman ports, especially Constantinople ports. Bureaucracy, while effective in other cases, slow down naval trade. For example, in free port area of Ragusa, it took about 12 hours and Achtopol even only eight hours to unload or load ships, in Constantinople it took between 36-48 hours. Another problem of Imperial Trade Monopol is very low sensitivity about national and local markets. Imperial trade planning system ignoring local efforts and needs which turns in to lack of goods, inflation and discontent. Another example, while we now need iron ore and coal as much as possible, Imperial Trade Monopoly offices and port commissars exporting this precious resources. We must abolish Imperial Trade Monopoly, decrease tariffs and expand ports in Constantinople.''

''Themes. System of "Themata" secured many important military and political victories for Roman Empire through ages and successfully turn away all efforts to implement feudalistic and manorial system, but now, it is outdated system. Themata system was lost in most of Anatolia and on Balkan, remaining Themata system blocking land reform, have very low rate of military reinforcements and even most of "military peasants" living on Themata desert during war situations. Still, Themata system hold about ten million hectares of farmlands with 65% of population. Themata must be abolished and Imperial Army and Navy reformed in to standing army. All Themata farmlands will be sell to peasants, or distributed in land reform.''

''Second step is already named land reform. With our massive territorial expansion, securing Serbia and Bosnia, with dissolution of Themata system and confiscation of Catholic aristocracy lands, we are able to use about 15 million hectares of land in land reform. About ten million hectares will be sell to peasants, while five million remaining hectares will be used for peasants, freemen and foreigners to increase imperial population. Hectares not sold in land reform will be used for military efforts and as imperial property.''

''Third and last step is more abstract and long term, but also important to overcome old thinking. We must use diplomacy not only as tool of repression, influence and imperialism, but also as economic tool to build better position for Constantinople and for realm through attraction for foreign merchants. All our emissary groups sent to foreign lands must be accompanied by merchant or government official focused on economy and trade.''

Signed: Weng Szia Cho, First Magistrate of Economy, Trade and Development, 12th January 1254

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New Way of Life, Weng Szia Cho.

''Acceptance and implementation of "Changes for Future" had deep and positive impact. Despite many struggles and even unrest initiated by guilds and supporters of old systems, all changes were finally accepted and production and development of Empire increasing!''

''Now we must take another steps and its steps of new way of economic life. While first manifesto from 1254 was long, New Way of Life will be shorter as it is only about four new economic policy.''

''National Imperial Bank. To better control over fiscal policy and money supply, Empire must establish superior bank which was inspect and control all private and local banks. National Imperial Bank will have total monopoly over coinage issue. National Imperial Bank leadership will be appointed by Emperor and by Imperial Senate. Governor of National Imperial Bank will be always appointed by Emperor.''

''Banknotes. National Imperial Bank and Imperial government should start with issuing banknotes for large transactions. In attachment is detailed instructions about banknotes, security elements against forgery and plans of the way to persuade people to use banknotes instead of coins.''

''Usury. Despite all stances against usury, I urge government to allow usury as motivation for more development and investment. Imperial government should allow usury about 5% for local banks and about 10% for National Imperial Bank. All above 10% will be considered as capital crime and will be punished by death.''

''Last and probably most important, policy is related to Imperial Trade Company. Since establishment of ITC until now, ITC is very unprofitable without money. Government declared no interest in subsidy ITC as ITC should be able to sustain without support. As alternative to subsidy from government, I am proposing stock system. Anyone with enough money will be able to invest in some of ITC project in exchange for stocks from which will be yearly paid monopoly. Example. I will pay money for some project in value of 30% of that project and I will get yearly 15% of profits (investment in % divided by two). However, there will be limit that only about 49% of project value can be invest and government will hold every time 51% of project. On other hand, the project may fail and investors will lose their money.''

Signed: Weng Szia Cho, First Magistrate of Economy, Trade and Development, 6th April 1263

Industry, Savior of Empire, Weng Szia Cho.

''Because of many success of budget cuts, internal reforms, diplomacy and laws reforms, we can now move toward last important reform. Reform that "Industry, Savior of Empire".''

While investment banking and stocks was very useful in case of local and national projects (Crimean Canal, Thracian route network, Ragusa port reconstruction, bridges over Dardaneles and Eastern Constantinople Canal), most of investors and merchants are still skeptical about industrial efforts of mass crafting despite many great improvements happened on Imperial lands where new factories built.

''According factory owners and ICT accounting inspections, craft production have many advantages. Best example is Constantinople Brickyards Co., their factory produced 20,000 bricks every day which is 100 times higher then average local guild productions, with 75% less material resources and 40% lower wages and other expenditures. Similar successes were observed among textile and weaving production halls, among furniture factories and especially armament industry.''

''From Imperial Security Service, I got report about corruption among merchants and investors, who are paid, persuaded or threated by remaining Guilds to not invest in industry and factories. Local investment projects had deep impact on improving trade and naval capabilities of Empire. However, their effect and impact will sooner or later end and our economy will again stagnate in face of extreme population increasing. This can also lead to inflation, as population demands will rise, while economy will not be able to satisfy them. Our population rose from four million in 1249 to 13.5 million in 1267 (most of them through capturing territories and immigration, but still, it is an extremely delicate situation).''

''I propose three simple steps to overcome this critical situation: I. Arrest all guildmasters and dissolve remaining guilds, II. Decrease or abolish all taxation for all investors, who invest their money in to factories and industry and III. Grant for free imperial slave supplies for factory construction.''

Signed: Weng Szia Cho, First Magistrate of Economy, Trade and Development, 1st August 1267 These three Weng Economic Reforms are considered as basic guideline for most of Roman Empire economy until overseas expansion in 1355 and Second Industrial Revolution in 1425 when Constantinople inventor Iulianos Altaryn invented an improved Steam Engine (Roger Bacon' steam engines were very primitive and only limited useful at ships and mines).

Weng was very concerned that since 1263 to 1267, revenues and production from crafthalls and factories increased only very slowly and most of economic growth was based on infrastructure, local and national projects with limited long term effects. From 1263 to 1267, investors put about 100 million hyperpyrons in to infrastructure projects, while only three million hyperpyrons in craft production and industry.

Weng understood situation is unsustainable and in attachment report for his third manifesto, he predicted that without increasing spending and investments in industry and with ongoing population boom, especially in cities and urban areas, inflation will grow from 2,2% in 1267 to about 500% in 1280 and 3,000% in 1290, which will cripple economy and fiscal policy.

While first two Weng reforms were accepted only by Imperial Government and Emperor, third reform was present to Imperial Senate because of controversial part about dissolving guilds and arresting guildmasters. After two weeks of Senate discussions, Emperor stopped all discussion and initiated voting.

108 Senators of Imperial Faction, Populares, Merchant Union and Ultraconservative Party supported reform against 92 Optimates and Liberals (according senatorial allocation after 1265 elections). It was one of few voting when Optimates were defeated during their short rule.

Weng last reform led to armed insurrection among Guild supporters and members in whole Empire, except largest cities. While in Constantinople and other metropolis Imperial Security Service was able quickly arrest and execute guildmasters, in rural areas and smaller cities, Guilds formed "Imperial Liberation Army" to defend "Their Rights and Freedom from Emperor Tyranny". Insurrection ended after about two years of local guerrilla fighting and uprisings with about 500 killed or wounded imperial troops and about 4000 killed or executed ILA supporters and members.

Weng reform was implemented in 1268, by Imperial Senate Law no. 4/68 and by Emperor extraordinary decree. In this decree also all property and lands owned by dissolved guilds were sold, or granted to cities, independent merchants and investors supporting industrialization and factory development as gift for their loyalty.

Only guild money (about 35 million hyperpyrons) were used by Imperial government to start building "Northern Trade Road" from Constantinople, through Bulgarian territories, Burgas and Veliko Tarnovo, Wallachia and to northern Russian republics, especially Novgorod and Pskov Republics. This land route connected Roman Empire with Scandinavia and opened large number of new trade partners.

Imperial Monetary Reforms
Through reign of Romanos V., Roman Empire implemented two monetary reforms proposed by magistrate Weng. First was very simple revaluation of Hyperpyron accepted by Imperial Government in May 1250. Revaluation reform was based on opening new gold mines, Genoese gold tribute and conquered wealth from Venice. From February to May 1250, Roman Empire acquired about 300,000 pounds of gold. New revalued Hyperpyron weight increased from 4.45g to 5g of pure gold. Revaluation was also applied on new silver Tracheas with weight increased from 5g to 7.5g and also pure silver. Except gold, Roman Empire alas acquired about 800,000 silver pounds. Lowest coin was copper tetartera, while existing billon version of trachea were scrapped. New copper tetartera had originally 10g of pure copper. This was changed to reach decimal monetary system. Tetartera minted from December 1250 had 9,5g of copper and 0,5g of silver.

Second monetary reform was implemented in 1264, when massive increase of money supply among population and in market became unbearable (literally). Large amount of coins caused many security problems, so magistrate Weng proposed new monetary reforms based on Chinese system of banknotes. National Imperial Bank was assigned with preparation first European banknotes to usage in Empire. In first series, NIB created 1 Golden Hyperpyron (10 Hyperpyrons), 1 nominal Hyperpyron, 5 Tracheas and 10 Tetartera banknotes. Banknotes became very popular, as their usage was simplier and more safety, then using large amount of coins. As "anti-counterfeinting" elements, NIB used on each banknote "invisible ink", seen only through sunshine. Banknote without this "invisible ink" was regarded as fake.

This monetary reform, however had much deeper impact then anyone can imagine. NIB employees and technicians were unable to handcopying such mass of banknotes, so they asked master Weng for help. He introduced them to using "Woodblock" and "Moveable" printing techniques from China. During introduction, one of technician asked: "Why we should not use this to book copying?" Magistrate Weng answer was simple: "Why not?". Application of banknotes led to initiate printing press development assigned to Constantinople University and master Weng, who had experiences with this technique from his homeland. In 1270 was printing press introduced to Emperor Romanos by master Roger Bacon and master Weng.

First Industrial Revolution (1270-1290)
As "First Industrial Revolution" is coined era between 1270 and 1290. During this time, Weng Third Economic Reform was fully implemented and took effect. Very soon after suppression of guilds and decreasing taxes, investment in factories and craft mass-production experienced extraordinary growth from three million hyperpyrons in 1267 to 250 million hyperpyrons in 1273. Average investment in to Imperial mass-production between years 1275-1285 was 150 million hyperpyrons annually. While from 1249 to 1267 were opened only 23 factories and craft mass-production workshops, from 1270 to 1285 were opened about 800 factories (rise from 1.2 factories per year to 53 factories per year). Highest rate of opened factories were just year before Weng death, in 1289, when were opened about 200 factories (most of them textile, silk processing, shipbuilding and weaponry).According modern economic historians, Roman economy in this era was still pre-industrial, as most GDP and workforce were assigned in agrarian economy and most people lived outside of cities, however, Roman Empire became most industrialized economy in world. Critics of industrialization pointed about increasing dependency of Empire on food and resources import. While Empire in 1265 had about 175% food self-sufficiency, in 1290 it was only about 117%, but rose to 225% in 1312 when peaked First Agricultural Revolution (1300-1325).

On other hand, proponents of industrialization pointed on massive economic grewth, increase of revenues, massive budget surplus, decrease of expenditures and increasing social spending that helping poor classes (the last one was however criticized by Optimates). Also imperial trade position among other countries became top and four of five largest and most frequently used ports were in Empire (Constantinople, Thessaloniky, Ragusa and Smyrna, fifth place was London port). Roman Empire consisted about 17% of world trade exchange in 1290 and about 22% in 1312.

Later Romanos V. reign
Later era of Romanos reign is period from 1290, when died magistrate Weng, until death of Emperor Romanos V. in 1312. Romanos reign from 1249 until 1312 was longest uninterrupted Roman Emperor reign, even longer then Augustus reign. 63 years of reign, most of them were peaceful and prosperous (except First Pan-European War when Emperor sent Expeditionary corps, but this war did not directly affected Roman Empire), with realm expanding through alliances, influence and wealth, with few exceptions of some military expeditions (against Trapzond, Black Sea coasts, few military expeditions to Western Africa, Sicily and Sardinia, all of them victorious).