 Empire of Dirt
Bill Bonner
The
Daily Reckoning
Posted April 26, 2004
The Daily Reckoning PRESENTS: A history of the rise and fall of
Rome, Bonner-style.
This DR Classique was first aired on April 18, 2003, almost exactly
one year ago.
You could have it all my empire
of dirt I will let you down I will make you hurt. - Hurt, by
Trent Reznor of Nine Inch Nails
"What I don't understand,"
Elizabeth began a conversation on our last day in Rome, "is
why the barbarians - the Huns, the Goths, the Vandals and so
forth, wanted to destroy the empire? They could see that people
lived better inside the empire than outside... I mean, they had
central heating, warm baths, art... and just look at all those
beautiful buildings. Wouldn't it have made more sense for them
to join it, rather than tear it down?"
We had no answer, save resignation.
"Yes, well, you might as well ask why the Romans went to
all the trouble to build up their empire in the first place?
Wouldn't it have been much more reasonable to enjoy life here
in Rome... ?"
And here we offer readers a history of the rise and fall of the
world's greatest empire, as brief as the latest Italian underpants.
In the 8th century B.C., Rome was nothing more than a collection
of villages along the Tiber, inhabited by a collection of tribes,
principally Latin, Sabine, and Etruscan. Gradually, these 'Romans'
grew in number and power - and went to war with almost everyone.
In a celebrated early incident, perhaps only legendary, they
invited their neighbors, the Sabines, to a feast... and then
stole their women. The Sabine men did not celebrate; instead,
they took offense and nursed a grudge.
But there was hardly a tribe, kingdom or empire in Europe, North
Africa or the Middle East with whom the Romans did not pick a
fight. After the Sabine war, there were wars against the Albii,
the Etruscans, the Volcii, Carthaginians, Etruscans again, the
Latin league - and this is only a partial list - the Volsquii,
the Equii, the Veieii, the Gauls, Samnites, more Gauls, Epirians,
Carthaginians again, and more Gauls, Macedonians, Syrians, Macedonians
again, slaves in Sicily, Parthians... and even Romans in the
civil wars... and we have not even arrived at Caesar's wars against
the Gauls in 58-51 B.C. Roman history has another 500 years of
wars to go!
The civil wars in the 1st century B.C. put an end to the Republic...
then, Caesar crossed the Rubicon. It was a new era in Rome, an
era of Empire. It was as if Tommy Franks decided to move his
army to Washington and make a regime change of his own. Some
people would object, of course... the liberal papers would howl...
but most people wouldn't care.
In ancient Rome, as in modern Washington, people chose their
ideas like they chose their clothes - they wanted something that
not only did the job, but also something that was fashionable.
And at the time, it was à la mode for emperors and individuals
alike to pretend that they lived in a free republic, which honored
citizens' rights, but in practice... the government, and its
leader, could do what they liked. And what they seemed to like
doing was going out and making war against everyone they thought
they could beat.
Back then, of course, war was a paying proposition. When emperor
Trajan took Ctesiphon (near modern Baghdad) he captured 100,000
people who were sold into slavery. When Augustus took Egypt,
he used the Nile's wheat harvest to feed the growing population
of rabble in Rome.
But while some people came out ahead, in the aggregate, wars
then - as now - were negative-gain enterprises. And as the empire
grew, the costs mounted, too, to the point where both became
grotesque and insupportable.
"Until the rule of Augustus (who was installed as the first
ruler of the Roman Empire in 27 B.C.)," writes Marc Faber,
"the Romans only used pure gold and silver coins. In order
to finance his vast infrastructure expenditures, Augustus ordered
that government-owned mines in Spain and France should be exploited
24 hours a day, a measure which increased the money supply significantly
and also led to rising prices. (It is estimated that between
27 B.C. and 6 B.C., prices in Rome doubled.) In the second half
of his reign (6 B.C. to 14 A.D.), Augustus reduced coinage drastically,
as he recognized that the expanded money supply had led to the
rise in prices."
But Rome wasn't built in a day... nor was its money destroyed
overnight. In 64 A.D., in Nero's reign, the aureus was reduced
by 10% of its weight. Thereafter, whenever the Romans needed
more money to finance their wars, their public improvements,
their social welfare services and circuses, and their trade deficit,
they reduced the metal content of the coins. By time Odoacer
deposed the last emperor in 476, the denarius contained only
0.02% silver.
Still, the impulse to build up an empire seems to be as strong
as the impulse to tear one down. To the question, when does a
country aim for empire, comes the answer: whenever it can.
Every country in Europe has at one time or another reached for
the imperial purple. Portugal and Spain discovered and conquered
vast jungles, swamps and pampas... and built empires of them.
For Spain, the conquests were extremely profitable - after they
found huge quantities of gold and silver. But nothing ruins a
nation faster than easy money. The money supply grew larger with
every ship's return from the New World. People felt rich, but
prices soon soared. Worse, the easy money from the new territories
undermined honest industry. In the bubble economy of the early
16th century, Spain developed a trade deficit similar to that
of the U.S. today. People took their money and bought goods from
abroad. By the time the New World mines petered out, the Spanish
were bankrupt. The Spanish government defaulted on its loans
in 1557, 1575, 1607, 1627, and 1647. The damage was not only
severe, it was long lasting. The Iberian Peninsula became the
'sick man of Europe' and remained
on bed-rest until the 1980s.
France and England built their own empires in the 18th and 19th
centuries. Napoleon's conquests took less than a dozen years
to complete... but the empire collapsed even faster. By the end
of the 19th century, all that was left of the French empire were
a few islands no one could find on a map and some godforsaken
colonies in Africa that the French would soon regret ever having
laid eyes upon. Almost all were lost, forgotten or surrendered
by the 1960s - with nothing much to show for them except what
you find in the Louvre... and a population of African immigrants
who now weigh heavily on France's social welfare budget.
England's empire was much grander, stretched further, and left
more debris when it collapsed. But the end result was about the
same: the pound had been degraded and the British were nearly
bankrupt, while the crime rate in central London rose to surpass
that in New York... thanks largely to immigration from the former
colonies.
Germany lost its overseas colonies after WWI. It then created
another empire - by conquest - in the late '30s and early '40s.
The enterprise ran into Russia's empire in the East - resulting
in history's largest and bloodiest land battles. In the end,
thanks partly to American intervention on the side of the Russians,
the German empire was destroyed. The Russians' empire collapsed
under its own weight 44 years later.
Empires, like bubble markets, end up where they began. Rome began
as a town on the Tiber, with sheep grazing on the hills. A bull
market in Roman property lasted about 1000 years - from 700 B.C.
to about 300 A.D., when temples, monuments and villas crowded
the Palatine. Then, a bear market began... which also lasted
at least 1000 years.
As late as the 18th century, Rome was once again a city on the
Tiber... with sheep grazing on the hillsides, amid broken marble
columns and immense brick walls. They had been built for a reason...
but no one could recall why.
 Bill Bonner
The
Daily Reckoning
Editor's Note:
Bill Bonner is the founder and editor of The Daily Reckoning.
He is also the author, with Addison Wiggin, of the NY Times,
Wall Street Journal and international bestseller: "Financial
Reckoning Day:
Surviving The Soft Depression of The 21st Century" (John
Wiley & Sons).
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321gold Inc Miami USA
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