The Persian Empire had systemic economic problems based on their tax policy.
Taxes were levied on a provincial level. Some provinces provided taxes in kind for upkeep of the court. Most provinces, however, were required to pay their taxes in gold or silver coin. This was helpful in the beginning because it monetized the economy, standardized prices and encouraged regional trade.
The real problem was that Persian court didn’t spend most of the money they collected. They melted it down and poured it into giant urns, which stayed in the treasury. The court would break some out whenever they had a war to wage or palace to build, otherwise it just accumulated.
This resulted in a growing scarcity of coin. Commodity prices inflated as hard currency became more dear. People had to borrow at higher and higher rates to meet their tax bills. We can trace foreclosures, loan agreements and judgments in the Babylonian cuneiform tablets. It looks kind of like runaway inflation.
So when the Persian Empire faced Alexander, it was also faced with a crisis of morale. If Jimmy Carter had been there he would have called it “a malaise.”
|