Empire of Dirt

by Bill Bonner

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, and 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 tearing 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 Ceasar’s wars against the Gauls in 58-51 BC. 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, Ceasar crossed the Rubicon and 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 BC),” writes Marc Faber, “the Romans only used pure gold and silver coins. In order to finance his vast infrastructure expenditures, Augustus ordered the 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 BC and 6 BC, prices in Rome doubled.) In the second half of his reign (6 BC to AD 14), 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 the 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 a 1000 years – from 700 BC to about 300 AD, 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 [send him mail] is the founder and president of Agora Publishing, and the author of The Daily Reckoning.