Reconstruction works - Economy

ichael Palaiologos' first concern, after the recovery of Constantinople, was the repopulation and reconstruction of the City, which had been devastated by the Latins, and huge amounts of money were expended for this purpose. The city walls were repaired and many public buildings - market-places and forums, law-courts and theatres - were rebuilt or restored, while special attention was given to the restoration of religious institutions. Michael VIII saw to the rebuilding of churches and donated money and land to the monasteries, probably hoping thus to secure the support of the Church for his plans for union and to subdue the unrest that had been stirred up in the Byzantine society by the Arsenites, who were supporters of the Laskaris dynasty and advocates of the purification of the Church.

As a result of Michael's open-handedness, the money that the Laskaris family had so carefully amassed in the imperial treasury was not sufficient to cover the state's domestic needs, nor did it suffice to meet the cost of the country's defence, which consisted mainly in the hiring of foreign mercenaries and the building up of a fleet. Thus, in order to increase the income of the state, Palaiologos proceeded to devaluate the hyperpyron, the standard Byzantine coin. However, not only did the state's financial situation not improve, but on the contrary it actually worsened as a result of the lavish concession of privileges to the higher classes. At the same time, the favour shown to certain holders of proniai, who were exempted from any payment of duties to the state, deprived the latter of this source of income as well, and encouraged the development of a class of great landowners, which was to dominate the scene during the entire final period of the Empire.